Correlation Between Eve Holding and AeroVironment
Can any of the company-specific risk be diversified away by investing in both Eve Holding 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 Eve Holding and AeroVironment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eve Holding and AeroVironment, you can compare the effects of market volatilities on Eve Holding 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 Eve Holding with a short position of AeroVironment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eve Holding and AeroVironment.
Diversification Opportunities for Eve Holding and AeroVironment
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eve and AeroVironment is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Eve Holding and AeroVironment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroVironment and Eve Holding 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 Eve Holding 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 Eve Holding i.e., Eve Holding and AeroVironment go up and down completely randomly.
Pair Corralation between Eve Holding and AeroVironment
Given the investment horizon of 90 days Eve Holding is expected to under-perform the AeroVironment. In addition to that, Eve Holding is 3.53 times more volatile than AeroVironment. It trades about 0.0 of its total potential returns per unit of risk. AeroVironment is currently generating about 0.18 per unit of volatility. If you would invest 16,120 in AeroVironment on October 23, 2024 and sell it today you would earn a total of 754.00 from holding AeroVironment or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Eve Holding vs. AeroVironment
Performance |
| Timeline |
| Eve Holding |
| AeroVironment |
Eve Holding and AeroVironment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eve Holding and AeroVironment
The main advantage of trading using opposite Eve Holding and AeroVironment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eve Holding 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.| Eve Holding vs. Heico | Eve Holding vs. Mercury Systems | Eve Holding vs. AeroVironment | Eve Holding vs. Howmet Aerospace |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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