Correlation Between AAR Corp and V2X
Can any of the company-specific risk be diversified away by investing in both AAR Corp and V2X 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 V2X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAR Corp and V2X Inc, you can compare the effects of market volatilities on AAR Corp and V2X 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 V2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAR Corp and V2X.
Diversification Opportunities for AAR Corp and V2X
Significant diversification
The 3 months correlation between AAR and V2X is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding AAR Corp and V2X Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V2X Inc 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 V2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V2X Inc has no effect on the direction of AAR Corp i.e., AAR Corp and V2X go up and down completely randomly.
Pair Corralation between AAR Corp and V2X
Considering the 90-day investment horizon AAR Corp is expected to generate 1.07 times more return on investment than V2X. However, AAR Corp is 1.07 times more volatile than V2X Inc. It trades about 0.26 of its potential returns per unit of risk. V2X Inc is currently generating about 0.21 per unit of risk. If you would invest 6,159 in AAR Corp on November 2, 2024 and sell it today you would earn a total of 725.00 from holding AAR Corp or generate 11.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAR Corp vs. V2X Inc
Performance |
| Timeline |
| AAR Corp |
| V2X Inc |
AAR Corp and V2X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAR Corp and V2X
The main advantage of trading using opposite AAR Corp and V2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAR Corp position performs unexpectedly, V2X 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 V2X will offset losses from the drop in V2X's long position.| AAR Corp vs. Sidus Space | AAR Corp vs. Planet Labs PBC | AAR Corp vs. Intuitive Machines | AAR Corp vs. Rocket Lab USA |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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