Correlation Between AeroVironment and Aerojet Rocketdyne
Can any of the company-specific risk be diversified away by investing in both AeroVironment and Aerojet Rocketdyne 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 Aerojet Rocketdyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AeroVironment and Aerojet Rocketdyne Holdings, you can compare the effects of market volatilities on AeroVironment and Aerojet Rocketdyne 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 Aerojet Rocketdyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of AeroVironment and Aerojet Rocketdyne.
Diversification Opportunities for AeroVironment and Aerojet Rocketdyne
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AeroVironment and Aerojet is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding AeroVironment and Aerojet Rocketdyne Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerojet Rocketdyne 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 Aerojet Rocketdyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerojet Rocketdyne has no effect on the direction of AeroVironment i.e., AeroVironment and Aerojet Rocketdyne go up and down completely randomly.
Pair Corralation between AeroVironment and Aerojet Rocketdyne
If you would invest 5,622 in Aerojet Rocketdyne Holdings on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Aerojet Rocketdyne Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
AeroVironment vs. Aerojet Rocketdyne Holdings
Performance |
| Timeline |
| AeroVironment |
| Aerojet Rocketdyne |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AeroVironment and Aerojet Rocketdyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AeroVironment and Aerojet Rocketdyne
The main advantage of trading using opposite AeroVironment and Aerojet Rocketdyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AeroVironment position performs unexpectedly, Aerojet Rocketdyne 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 Aerojet Rocketdyne will offset losses from the drop in Aerojet Rocketdyne's long position.| AeroVironment vs. L3Harris Technologies | AeroVironment vs. Mercury Systems | AeroVironment vs. Textron | AeroVironment vs. HEICO |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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