Correlation Between AeroVironment and Archer Aviation
Can any of the company-specific risk be diversified away by investing in both AeroVironment and Archer Aviation 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 AeroVironment and Archer Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AeroVironment and Archer Aviation, you can compare the effects of market volatilities on AeroVironment and Archer Aviation 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 AeroVironment with a short position of Archer Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of AeroVironment and Archer Aviation.
Diversification Opportunities for AeroVironment and Archer Aviation
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between AeroVironment and Archer is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding AeroVironment and Archer Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Aviation and AeroVironment 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 AeroVironment are associated (or correlated) with Archer Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Aviation has no effect on the direction of AeroVironment i.e., AeroVironment and Archer Aviation go up and down completely randomly.
Pair Corralation between AeroVironment and Archer Aviation
Given the investment horizon of 90 days AeroVironment is expected to generate 1.67 times less return on investment than Archer Aviation. But when comparing it to its historical volatility, AeroVironment is 1.82 times less risky than Archer Aviation. It trades about 0.07 of its potential returns per unit of risk. Archer Aviation is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 285.00 in Archer Aviation on August 27, 2024 and sell it today you would earn a total of 463.00 from holding Archer Aviation or generate 162.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AeroVironment vs. Archer Aviation
Performance |
| Timeline |
| AeroVironment |
| Archer Aviation |
AeroVironment and Archer Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AeroVironment and Archer Aviation
The main advantage of trading using opposite AeroVironment and Archer Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AeroVironment position performs unexpectedly, Archer Aviation 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 Archer Aviation will offset losses from the drop in Archer Aviation's long position.| AeroVironment vs. L3Harris Technologies | AeroVironment vs. Mercury Systems | AeroVironment vs. Textron | AeroVironment vs. HEICO |
| Archer Aviation vs. Vertical Aerospace | Archer Aviation vs. Ehang Holdings | Archer Aviation vs. Rocket Lab USA | Archer Aviation 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |