Correlation Between AAR Corp and OMRON Corp
Can any of the company-specific risk be diversified away by investing in both AAR Corp and OMRON Corp 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 OMRON Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAR Corp and OMRON Corp ADR, you can compare the effects of market volatilities on AAR Corp and OMRON Corp 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 OMRON Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAR Corp and OMRON Corp.
Diversification Opportunities for AAR Corp and OMRON Corp
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AAR and OMRON is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding AAR Corp and OMRON Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMRON Corp ADR 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 OMRON Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMRON Corp ADR has no effect on the direction of AAR Corp i.e., AAR Corp and OMRON Corp go up and down completely randomly.
Pair Corralation between AAR Corp and OMRON Corp
Considering the 90-day investment horizon AAR Corp is expected to generate 1.15 times more return on investment than OMRON Corp. However, AAR Corp is 1.15 times more volatile than OMRON Corp ADR. It trades about 0.3 of its potential returns per unit of risk. OMRON Corp ADR is currently generating about -0.09 per unit of risk. If you would invest 6,105 in AAR Corp on October 26, 2024 and sell it today you would earn a total of 819.00 from holding AAR Corp or generate 13.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
AAR Corp vs. OMRON Corp ADR
Performance |
| Timeline |
| AAR Corp |
| OMRON Corp ADR |
AAR Corp and OMRON Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAR Corp and OMRON Corp
The main advantage of trading using opposite AAR Corp and OMRON Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAR Corp position performs unexpectedly, OMRON Corp 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 OMRON Corp will offset losses from the drop in OMRON Corp's long position.| AAR Corp vs. Curtiss Wright | AAR Corp vs. Hexcel | AAR Corp vs. Moog Inc | AAR Corp vs. Ducommun Incorporated |
| OMRON Corp vs. Murata Manufacturing Co | OMRON Corp vs. LGL Group | OMRON Corp vs. Data IO | OMRON Corp vs. Bel Fuse A |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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