Correlation Between Charter Communications and AeroVironment
Can any of the company-specific risk be diversified away by investing in both Charter Communications and AeroVironment 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 Charter Communications and AeroVironment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and AeroVironment, you can compare the effects of market volatilities on Charter Communications and AeroVironment 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 Charter Communications with a short position of AeroVironment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and AeroVironment.
Diversification Opportunities for Charter Communications and AeroVironment
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Charter and AeroVironment is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and AeroVironment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroVironment and Charter Communications 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 Charter Communications are associated (or correlated) with AeroVironment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AeroVironment has no effect on the direction of Charter Communications i.e., Charter Communications and AeroVironment go up and down completely randomly.
Pair Corralation between Charter Communications and AeroVironment
Assuming the 90 days trading horizon Charter Communications is expected to generate 14.79 times less return on investment than AeroVironment. But when comparing it to its historical volatility, Charter Communications is 1.54 times less risky than AeroVironment. It trades about 0.01 of its potential returns per unit of risk. AeroVironment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,526 in AeroVironment on October 11, 2024 and sell it today you would earn a total of 8,249 from holding AeroVironment or generate 109.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. AeroVironment
Performance |
| Timeline |
| Charter Communications |
| AeroVironment |
Charter Communications and AeroVironment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and AeroVironment
The main advantage of trading using opposite Charter Communications and AeroVironment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, AeroVironment 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 AeroVironment will offset losses from the drop in AeroVironment's long position.| Charter Communications vs. Hua Hong Semiconductor | Charter Communications vs. Elmos Semiconductor SE | Charter Communications vs. MagnaChip Semiconductor Corp | Charter Communications vs. JLF INVESTMENT |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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