Correlation Between Archer Aviation and General Dynamics
Can any of the company-specific risk be diversified away by investing in both Archer Aviation and General Dynamics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Archer Aviation and General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Aviation and General Dynamics, you can compare the effects of market volatilities on Archer Aviation and General Dynamics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Archer Aviation with a short position of General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Aviation and General Dynamics.
Diversification Opportunities for Archer Aviation and General Dynamics
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Archer and General is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Archer Aviation and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics and Archer Aviation is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Archer Aviation are associated (or correlated) with General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics has no effect on the direction of Archer Aviation i.e., Archer Aviation and General Dynamics go up and down completely randomly.
Pair Corralation between Archer Aviation and General Dynamics
Given the investment horizon of 90 days Archer Aviation is expected to generate 5.29 times more return on investment than General Dynamics. However, Archer Aviation is 5.29 times more volatile than General Dynamics. It trades about 0.21 of its potential returns per unit of risk. General Dynamics is currently generating about -0.13 per unit of risk. If you would invest 330.00 in Archer Aviation on September 12, 2024 and sell it today you would earn a total of 409.00 from holding Archer Aviation or generate 123.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Archer Aviation vs. General Dynamics
Performance |
| Timeline |
| Archer Aviation |
| General Dynamics |
Archer Aviation and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archer Aviation and General Dynamics
The main advantage of trading using opposite Archer Aviation and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Aviation position performs unexpectedly, General Dynamics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in General Dynamics will offset losses from the drop in General Dynamics' long position.| Archer Aviation vs. Vertical Aerospace | Archer Aviation vs. Ehang Holdings | Archer Aviation vs. Rocket Lab USA | Archer Aviation vs. Lilium NV |
| General Dynamics vs. Novocure | General Dynamics vs. HubSpot | General Dynamics vs. DigitalOcean Holdings | General Dynamics vs. Appian Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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