Correlation Between AAR Corp and Air Industries
Can any of the company-specific risk be diversified away by investing in both AAR Corp and Air Industries 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 AAR Corp and Air Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAR Corp and Air Industries Group, you can compare the effects of market volatilities on AAR Corp and Air Industries 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 AAR Corp with a short position of Air Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAR Corp and Air Industries.
Diversification Opportunities for AAR Corp and Air Industries
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AAR and Air is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AAR Corp and Air Industries Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Industries Group and AAR Corp 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 AAR Corp are associated (or correlated) with Air Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Industries Group has no effect on the direction of AAR Corp i.e., AAR Corp and Air Industries go up and down completely randomly.
Pair Corralation between AAR Corp and Air Industries
Considering the 90-day investment horizon AAR Corp is expected to generate 2.6 times less return on investment than Air Industries. But when comparing it to its historical volatility, AAR Corp is 3.45 times less risky than Air Industries. It trades about 0.05 of its potential returns per unit of risk. Air Industries Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 380.00 in Air Industries Group on August 30, 2024 and sell it today you would earn a total of 69.00 from holding Air Industries Group or generate 18.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAR Corp vs. Air Industries Group
Performance |
| Timeline |
| AAR Corp |
| Air Industries Group |
AAR Corp and Air Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAR Corp and Air Industries
The main advantage of trading using opposite AAR Corp and Air Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAR Corp position performs unexpectedly, Air Industries 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 Air Industries will offset losses from the drop in Air Industries' long position.| AAR Corp vs. Curtiss Wright | AAR Corp vs. Hexcel | AAR Corp vs. Moog Inc | AAR Corp vs. Ducommun Incorporated |
| Air Industries vs. SIFCO Industries | Air Industries vs. CPI Aerostructures | Air Industries vs. VSE Corporation | Air Industries vs. National Presto Industries |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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