Correlation Between Heico and Vertical Aerospace
Can any of the company-specific risk be diversified away by investing in both Heico and Vertical Aerospace 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 Vertical Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heico and Vertical Aerospace, you can compare the effects of market volatilities on Heico and Vertical Aerospace 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 Vertical Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heico and Vertical Aerospace.
Diversification Opportunities for Heico and Vertical Aerospace
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Heico and Vertical is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Heico and Vertical Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertical Aerospace 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 Vertical Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertical Aerospace has no effect on the direction of Heico i.e., Heico and Vertical Aerospace go up and down completely randomly.
Pair Corralation between Heico and Vertical Aerospace
Considering the 90-day investment horizon Heico is expected to generate 0.11 times more return on investment than Vertical Aerospace. However, Heico is 9.26 times less risky than Vertical Aerospace. It trades about 0.02 of its potential returns per unit of risk. Vertical Aerospace is currently generating about -0.24 per unit of risk. If you would invest 23,708 in Heico on November 2, 2024 and sell it today you would earn a total of 103.00 from holding Heico or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heico vs. Vertical Aerospace
Performance |
| Timeline |
| Heico |
| Vertical Aerospace |
Heico and Vertical Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heico and Vertical Aerospace
The main advantage of trading using opposite Heico and Vertical Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heico position performs unexpectedly, Vertical Aerospace 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 Vertical Aerospace will offset losses from the drop in Vertical Aerospace's long position.The idea behind Heico and Vertical Aerospace pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Vertical Aerospace vs. Archer Aviation | Vertical Aerospace vs. Ehang Holdings | Vertical Aerospace vs. Rocket Lab USA | Vertical Aerospace vs. Lilium NV |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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