Correlation Between Huntington Ingalls and AeroVironment
Can any of the company-specific risk be diversified away by investing in both Huntington Ingalls 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 Huntington Ingalls and AeroVironment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntington Ingalls Industries and AeroVironment, you can compare the effects of market volatilities on Huntington Ingalls 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 Huntington Ingalls with a short position of AeroVironment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntington Ingalls and AeroVironment.
Diversification Opportunities for Huntington Ingalls and AeroVironment
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Huntington and AeroVironment is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Ingalls Industries and AeroVironment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroVironment and Huntington Ingalls 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 Huntington Ingalls Industries 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 Huntington Ingalls i.e., Huntington Ingalls and AeroVironment go up and down completely randomly.
Pair Corralation between Huntington Ingalls and AeroVironment
Considering the 90-day investment horizon Huntington Ingalls is expected to generate 59.54 times less return on investment than AeroVironment. But when comparing it to its historical volatility, Huntington Ingalls Industries is 1.56 times less risky than AeroVironment. It trades about 0.0 of its potential returns per unit of risk. AeroVironment is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,178 in AeroVironment on August 27, 2024 and sell it today you would earn a total of 10,413 from holding AeroVironment or generate 113.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huntington Ingalls Industries vs. AeroVironment
Performance |
| Timeline |
| Huntington Ingalls |
| AeroVironment |
Huntington Ingalls and AeroVironment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntington Ingalls and AeroVironment
The main advantage of trading using opposite Huntington Ingalls and AeroVironment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Ingalls 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.| Huntington Ingalls vs. Lockheed Martin | Huntington Ingalls vs. General Dynamics | Huntington Ingalls vs. Raytheon Technologies Corp | Huntington Ingalls vs. L3Harris Technologies |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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