Correlation Between AeroVironment and Momentus
Can any of the company-specific risk be diversified away by investing in both AeroVironment and Momentus 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 Momentus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AeroVironment and Momentus, you can compare the effects of market volatilities on AeroVironment and Momentus 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 Momentus. Check out your portfolio center. Please also check ongoing floating volatility patterns of AeroVironment and Momentus.
Diversification Opportunities for AeroVironment and Momentus
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between AeroVironment and Momentus is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding AeroVironment and Momentus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Momentus 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 Momentus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Momentus has no effect on the direction of AeroVironment i.e., AeroVironment and Momentus go up and down completely randomly.
Pair Corralation between AeroVironment and Momentus
Given the investment horizon of 90 days AeroVironment is expected to generate 12.31 times less return on investment than Momentus. But when comparing it to its historical volatility, AeroVironment is 9.01 times less risky than Momentus. It trades about 0.08 of its potential returns per unit of risk. Momentus is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.85 in Momentus on September 3, 2024 and sell it today you would earn a total of 0.55 from holding Momentus or generate 64.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.68% |
| Values | Daily Returns |
AeroVironment vs. Momentus
Performance |
| Timeline |
| AeroVironment |
| Momentus |
AeroVironment and Momentus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AeroVironment and Momentus
The main advantage of trading using opposite AeroVironment and Momentus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AeroVironment position performs unexpectedly, Momentus 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 Momentus will offset losses from the drop in Momentus' long position.| AeroVironment vs. L3Harris Technologies | AeroVironment vs. Mercury Systems | AeroVironment vs. Textron | AeroVironment vs. HEICO |
| Momentus vs. Microvast Holdings | Momentus vs. Momentus | Momentus vs. Faraday Future Intelligent | Momentus vs. Xos Equity Warrants |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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