Correlation Between HEICO and AeroVironment
Can any of the company-specific risk be diversified away by investing in both HEICO 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 HEICO and AeroVironment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEICO and AeroVironment, you can compare the effects of market volatilities on HEICO 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 HEICO with a short position of AeroVironment. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEICO and AeroVironment.
Diversification Opportunities for HEICO and AeroVironment
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HEICO and AeroVironment is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding HEICO and AeroVironment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroVironment and HEICO 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 HEICO 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 HEICO i.e., HEICO and AeroVironment go up and down completely randomly.
Pair Corralation between HEICO and AeroVironment
Assuming the 90 days horizon HEICO is expected to generate 0.59 times more return on investment than AeroVironment. However, HEICO is 1.7 times less risky than AeroVironment. It trades about 0.31 of its potential returns per unit of risk. AeroVironment is currently generating about -0.23 per unit of risk. If you would invest 19,436 in HEICO on August 28, 2024 and sell it today you would earn a total of 2,012 from holding HEICO or generate 10.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HEICO vs. AeroVironment
Performance |
| Timeline |
| HEICO |
| AeroVironment |
HEICO and AeroVironment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEICO and AeroVironment
The main advantage of trading using opposite HEICO and AeroVironment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEICO 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.| HEICO vs. Vertical Aerospace | HEICO vs. Rolls Royce Holdings plc | HEICO vs. Embraer SA ADR | HEICO vs. Rocket Lab USA |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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