Correlation Between Embraer SA and Astronics
Can any of the company-specific risk be diversified away by investing in both Embraer SA and Astronics 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 Embraer SA and Astronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embraer SA ADR and Astronics, you can compare the effects of market volatilities on Embraer SA and Astronics 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 Embraer SA with a short position of Astronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embraer SA and Astronics.
Diversification Opportunities for Embraer SA and Astronics
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Embraer and Astronics is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Embraer SA ADR and Astronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics and Embraer SA 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 Embraer SA ADR are associated (or correlated) with Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics has no effect on the direction of Embraer SA i.e., Embraer SA and Astronics go up and down completely randomly.
Pair Corralation between Embraer SA and Astronics
Considering the 90-day investment horizon Embraer SA is expected to generate 1.48 times less return on investment than Astronics. In addition to that, Embraer SA is 1.02 times more volatile than Astronics. It trades about 0.23 of its total potential returns per unit of risk. Astronics is currently generating about 0.35 per unit of volatility. If you would invest 1,579 in Astronics on November 2, 2024 and sell it today you would earn a total of 196.00 from holding Astronics or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embraer SA ADR vs. Astronics
Performance |
| Timeline |
| Embraer SA ADR |
| Astronics |
Embraer SA and Astronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embraer SA and Astronics
The main advantage of trading using opposite Embraer SA and Astronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embraer SA position performs unexpectedly, Astronics 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 Astronics will offset losses from the drop in Astronics' long position.| Embraer SA vs. HEICO | Embraer SA vs. Vertical Aerospace | Embraer SA vs. Rolls Royce Holdings plc | Embraer SA vs. Rocket Lab USA |
| Astronics vs. Ducommun Incorporated | Astronics vs. Innovative Solutions and | Astronics vs. National Presto Industries | Astronics vs. Park Electrochemical |
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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