Correlation Between Austal and Vertical Aerospace
Can any of the company-specific risk be diversified away by investing in both Austal and Vertical Aerospace 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 Austal and Vertical Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austal Limited and Vertical Aerospace, you can compare the effects of market volatilities on Austal and Vertical Aerospace 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 Austal with a short position of Vertical Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austal and Vertical Aerospace.
Diversification Opportunities for Austal and Vertical Aerospace
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Austal and Vertical is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Austal Limited and Vertical Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertical Aerospace and Austal 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 Austal Limited are associated (or correlated) with Vertical Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertical Aerospace has no effect on the direction of Austal i.e., Austal and Vertical Aerospace go up and down completely randomly.
Pair Corralation between Austal and Vertical Aerospace
Assuming the 90 days horizon Austal Limited is expected to under-perform the Vertical Aerospace. But the pink sheet apears to be less risky and, when comparing its historical volatility, Austal Limited is 2.38 times less risky than Vertical Aerospace. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Vertical Aerospace is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 502.00 in Vertical Aerospace on September 1, 2024 and sell it today you would earn a total of 508.00 from holding Vertical Aerospace or generate 101.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Austal Limited vs. Vertical Aerospace
Performance |
| Timeline |
| Austal Limited |
| Vertical Aerospace |
Austal and Vertical Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austal and Vertical Aerospace
The main advantage of trading using opposite Austal and Vertical Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austal position performs unexpectedly, Vertical Aerospace 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 Vertical Aerospace will offset losses from the drop in Vertical Aerospace's long position.| Austal vs. Firan Technology Group | Austal vs. 808 Renewable Energy | Austal vs. Park Electrochemical | Austal vs. Innovative Solutions and |
| Vertical Aerospace vs. Archer Aviation | Vertical Aerospace vs. Ehang Holdings | Vertical Aerospace vs. Rocket Lab USA | Vertical Aerospace vs. Lilium NV |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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