Correlation Between Virgin Galactic and Archer Aviation
Can any of the company-specific risk be diversified away by investing in both Virgin Galactic and Archer Aviation 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 Virgin Galactic and Archer Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virgin Galactic Holdings and Archer Aviation, you can compare the effects of market volatilities on Virgin Galactic and Archer Aviation 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 Virgin Galactic with a short position of Archer Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Galactic and Archer Aviation.
Diversification Opportunities for Virgin Galactic and Archer Aviation
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Virgin and Archer is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Galactic Holdings and Archer Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Aviation and Virgin Galactic 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 Virgin Galactic Holdings are associated (or correlated) with Archer Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Aviation has no effect on the direction of Virgin Galactic i.e., Virgin Galactic and Archer Aviation go up and down completely randomly.
Pair Corralation between Virgin Galactic and Archer Aviation
Given the investment horizon of 90 days Virgin Galactic Holdings is expected to under-perform the Archer Aviation. But the stock apears to be less risky and, when comparing its historical volatility, Virgin Galactic Holdings is 1.75 times less risky than Archer Aviation. The stock trades about -0.29 of its potential returns per unit of risk. The Archer Aviation is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 957.00 in Archer Aviation on November 2, 2024 and sell it today you would lose (30.00) from holding Archer Aviation or give up 3.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Galactic Holdings vs. Archer Aviation
Performance |
| Timeline |
| Virgin Galactic Holdings |
| Archer Aviation |
Virgin Galactic and Archer Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Galactic and Archer Aviation
The main advantage of trading using opposite Virgin Galactic and Archer Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Galactic position performs unexpectedly, Archer Aviation 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 Archer Aviation will offset losses from the drop in Archer Aviation's long position.| Virgin Galactic vs. Planet Labs PBC | Virgin Galactic vs. Eve Holding | Virgin Galactic vs. Redwire Corp | Virgin Galactic vs. Lockheed Martin |
| Archer Aviation vs. Vertical Aerospace | Archer Aviation vs. Ehang Holdings | Archer Aviation vs. Rocket Lab USA | Archer Aviation 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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