Correlation Between Archer Aviation and Beauty Health
Can any of the company-specific risk be diversified away by investing in both Archer Aviation and Beauty Health 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 Beauty Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Aviation and Beauty Health Co, you can compare the effects of market volatilities on Archer Aviation and Beauty Health 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 Beauty Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Aviation and Beauty Health.
Diversification Opportunities for Archer Aviation and Beauty Health
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Archer and Beauty is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Archer Aviation and Beauty Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Health 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 Beauty Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Health has no effect on the direction of Archer Aviation i.e., Archer Aviation and Beauty Health go up and down completely randomly.
Pair Corralation between Archer Aviation and Beauty Health
Given the investment horizon of 90 days Archer Aviation is expected to generate 1.48 times more return on investment than Beauty Health. However, Archer Aviation is 1.48 times more volatile than Beauty Health Co. It trades about 0.5 of its potential returns per unit of risk. Beauty Health Co is currently generating about -0.16 per unit of risk. If you would invest 341.00 in Archer Aviation on August 27, 2024 and sell it today you would earn a total of 407.00 from holding Archer Aviation or generate 119.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Archer Aviation vs. Beauty Health Co
Performance |
| Timeline |
| Archer Aviation |
| Beauty Health |
Archer Aviation and Beauty Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archer Aviation and Beauty Health
The main advantage of trading using opposite Archer Aviation and Beauty Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Aviation position performs unexpectedly, Beauty Health 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 Beauty Health will offset losses from the drop in Beauty Health's long position.| Archer Aviation vs. Vertical Aerospace | Archer Aviation vs. Ehang Holdings | Archer Aviation vs. Rocket Lab USA | Archer Aviation vs. Lilium NV |
| Beauty Health vs. Honest Company | Beauty Health vs. Hims Hers Health | Beauty Health vs. Procter Gamble | Beauty Health vs. Kimberly Clark |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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