Correlation Between Vertical Aerospace and Aerojet Rocketdyne
Can any of the company-specific risk be diversified away by investing in both Vertical Aerospace and Aerojet Rocketdyne 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 Vertical Aerospace and Aerojet Rocketdyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vertical Aerospace and Aerojet Rocketdyne Holdings, you can compare the effects of market volatilities on Vertical Aerospace and Aerojet Rocketdyne 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 Vertical Aerospace with a short position of Aerojet Rocketdyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vertical Aerospace and Aerojet Rocketdyne.
Diversification Opportunities for Vertical Aerospace and Aerojet Rocketdyne
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vertical and Aerojet is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vertical Aerospace and Aerojet Rocketdyne Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerojet Rocketdyne and Vertical Aerospace 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 Vertical Aerospace are associated (or correlated) with Aerojet Rocketdyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerojet Rocketdyne has no effect on the direction of Vertical Aerospace i.e., Vertical Aerospace and Aerojet Rocketdyne go up and down completely randomly.
Pair Corralation between Vertical Aerospace and Aerojet Rocketdyne
If you would invest 5,622 in Aerojet Rocketdyne Holdings on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Aerojet Rocketdyne Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Vertical Aerospace vs. Aerojet Rocketdyne Holdings
Performance |
| Timeline |
| Vertical Aerospace |
| Aerojet Rocketdyne |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Vertical Aerospace and Aerojet Rocketdyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vertical Aerospace and Aerojet Rocketdyne
The main advantage of trading using opposite Vertical Aerospace and Aerojet Rocketdyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertical Aerospace position performs unexpectedly, Aerojet Rocketdyne 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 Aerojet Rocketdyne will offset losses from the drop in Aerojet Rocketdyne's long position.| Vertical Aerospace vs. Archer Aviation | Vertical Aerospace vs. Ehang Holdings | Vertical Aerospace vs. Rocket Lab USA | Vertical Aerospace vs. Lilium NV |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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