Correlation Between Ducommun Incorporated and Alabama Aircraft
Can any of the company-specific risk be diversified away by investing in both Ducommun Incorporated and Alabama Aircraft 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 Ducommun Incorporated and Alabama Aircraft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ducommun Incorporated and Alabama Aircraft Industries, you can compare the effects of market volatilities on Ducommun Incorporated and Alabama Aircraft 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 Ducommun Incorporated with a short position of Alabama Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ducommun Incorporated and Alabama Aircraft.
Diversification Opportunities for Ducommun Incorporated and Alabama Aircraft
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ducommun and Alabama is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ducommun Incorporated and Alabama Aircraft Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alabama Aircraft Ind and Ducommun Incorporated 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 Ducommun Incorporated are associated (or correlated) with Alabama Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alabama Aircraft Ind has no effect on the direction of Ducommun Incorporated i.e., Ducommun Incorporated and Alabama Aircraft go up and down completely randomly.
Pair Corralation between Ducommun Incorporated and Alabama Aircraft
Considering the 90-day investment horizon Ducommun Incorporated is expected to generate 0.14 times more return on investment than Alabama Aircraft. However, Ducommun Incorporated is 7.3 times less risky than Alabama Aircraft. It trades about 0.04 of its potential returns per unit of risk. Alabama Aircraft Industries is currently generating about -0.15 per unit of risk. If you would invest 4,819 in Ducommun Incorporated on August 26, 2024 and sell it today you would earn a total of 1,809 from holding Ducommun Incorporated or generate 37.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 9.05% |
| Values | Daily Returns |
Ducommun Incorporated vs. Alabama Aircraft Industries
Performance |
| Timeline |
| Ducommun Incorporated |
| Alabama Aircraft Ind |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ducommun Incorporated and Alabama Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ducommun Incorporated and Alabama Aircraft
The main advantage of trading using opposite Ducommun Incorporated and Alabama Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ducommun Incorporated position performs unexpectedly, Alabama Aircraft 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 Alabama Aircraft will offset losses from the drop in Alabama Aircraft's long position.| Ducommun Incorporated vs. Innovative Solutions and | Ducommun Incorporated vs. National Presto Industries | Ducommun Incorporated vs. Astronics | Ducommun Incorporated vs. Park Electrochemical |
| Alabama Aircraft vs. World Houseware Limited | Alabama Aircraft vs. Newell Brands | Alabama Aircraft vs. RBC Bearings Incorporated | Alabama Aircraft vs. Dave Busters Entertainment |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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