Correlation Between New Horizon and AeroVironment
Can any of the company-specific risk be diversified away by investing in both New Horizon 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 New Horizon and AeroVironment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Horizon Aircraft and AeroVironment, you can compare the effects of market volatilities on New Horizon 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 New Horizon with a short position of AeroVironment. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Horizon and AeroVironment.
Diversification Opportunities for New Horizon and AeroVironment
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between New and AeroVironment is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding New Horizon Aircraft and AeroVironment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroVironment and New Horizon 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 New Horizon Aircraft 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 New Horizon i.e., New Horizon and AeroVironment go up and down completely randomly.
Pair Corralation between New Horizon and AeroVironment
Assuming the 90 days horizon New Horizon Aircraft is expected to generate 15.02 times more return on investment than AeroVironment. However, New Horizon is 15.02 times more volatile than AeroVironment. It trades about 0.15 of its potential returns per unit of risk. AeroVironment is currently generating about 0.18 per unit of risk. If you would invest 5.97 in New Horizon Aircraft on October 23, 2024 and sell it today you would earn a total of 1.48 from holding New Horizon Aircraft or generate 24.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
New Horizon Aircraft vs. AeroVironment
Performance |
| Timeline |
| New Horizon Aircraft |
| AeroVironment |
New Horizon and AeroVironment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Horizon and AeroVironment
The main advantage of trading using opposite New Horizon and AeroVironment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Horizon 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.| New Horizon vs. CanSino Biologics | New Horizon vs. Albemarle | New Horizon vs. Kingboard Chemical Holdings | New Horizon vs. Diageo PLC ADR |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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