Correlation Between AeroVironment and STEEL DYNAMICS
Can any of the company-specific risk be diversified away by investing in both AeroVironment and STEEL DYNAMICS 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 AeroVironment and STEEL DYNAMICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AeroVironment and STEEL DYNAMICS, you can compare the effects of market volatilities on AeroVironment and STEEL DYNAMICS 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 AeroVironment with a short position of STEEL DYNAMICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of AeroVironment and STEEL DYNAMICS.
Diversification Opportunities for AeroVironment and STEEL DYNAMICS
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AeroVironment and STEEL is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding AeroVironment and STEEL DYNAMICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL DYNAMICS and AeroVironment 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 AeroVironment are associated (or correlated) with STEEL DYNAMICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEL DYNAMICS has no effect on the direction of AeroVironment i.e., AeroVironment and STEEL DYNAMICS go up and down completely randomly.
Pair Corralation between AeroVironment and STEEL DYNAMICS
Assuming the 90 days horizon AeroVironment is expected to generate 1.83 times less return on investment than STEEL DYNAMICS. In addition to that, AeroVironment is 1.84 times more volatile than STEEL DYNAMICS. It trades about 0.03 of its total potential returns per unit of risk. STEEL DYNAMICS is currently generating about 0.11 per unit of volatility. If you would invest 10,265 in STEEL DYNAMICS on October 18, 2024 and sell it today you would earn a total of 1,889 from holding STEEL DYNAMICS or generate 18.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AeroVironment vs. STEEL DYNAMICS
Performance |
| Timeline |
| AeroVironment |
| STEEL DYNAMICS |
AeroVironment and STEEL DYNAMICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AeroVironment and STEEL DYNAMICS
The main advantage of trading using opposite AeroVironment and STEEL DYNAMICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AeroVironment position performs unexpectedly, STEEL DYNAMICS 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 STEEL DYNAMICS will offset losses from the drop in STEEL DYNAMICS's long position.| AeroVironment vs. bet at home AG | AeroVironment vs. PICKN PAY STORES | AeroVironment vs. MARKET VECTR RETAIL | AeroVironment vs. Retail Estates NV |
| STEEL DYNAMICS vs. Apple Inc | STEEL DYNAMICS vs. Apple Inc | STEEL DYNAMICS vs. Apple Inc | STEEL DYNAMICS vs. Apple Inc |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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