Correlation Between Embraer SA and AeroVironment
Can any of the company-specific risk be diversified away by investing in both Embraer SA 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 Embraer SA and AeroVironment 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 AeroVironment, you can compare the effects of market volatilities on Embraer SA 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 Embraer SA with a short position of AeroVironment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embraer SA and AeroVironment.
Diversification Opportunities for Embraer SA and AeroVironment
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Embraer and AeroVironment is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Embraer SA ADR and AeroVironment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroVironment 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 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 Embraer SA i.e., Embraer SA and AeroVironment go up and down completely randomly.
Pair Corralation between Embraer SA and AeroVironment
Considering the 90-day investment horizon Embraer SA ADR is expected to generate 0.96 times more return on investment than AeroVironment. However, Embraer SA ADR is 1.05 times less risky than AeroVironment. It trades about 0.11 of its potential returns per unit of risk. AeroVironment is currently generating about 0.0 per unit of risk. If you would invest 2,810 in Embraer SA ADR on August 28, 2024 and sell it today you would earn a total of 1,081 from holding Embraer SA ADR or generate 38.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embraer SA ADR vs. AeroVironment
Performance |
| Timeline |
| Embraer SA ADR |
| AeroVironment |
Embraer SA and AeroVironment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embraer SA and AeroVironment
The main advantage of trading using opposite Embraer SA and AeroVironment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embraer SA 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.| Embraer SA vs. Sidus Space | Embraer SA vs. Rocket Lab USA | Embraer SA vs. Momentus | Embraer SA vs. Planet Labs PBC |
| AeroVironment vs. L3Harris Technologies | AeroVironment vs. Mercury Systems | AeroVironment vs. Textron | AeroVironment vs. HEICO |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |