Correlation Between Triumph and Archer Aviation
Can any of the company-specific risk be diversified away by investing in both Triumph 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 Triumph and Archer Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triumph Group and Archer Aviation, you can compare the effects of market volatilities on Triumph 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 Triumph with a short position of Archer Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triumph and Archer Aviation.
Diversification Opportunities for Triumph and Archer Aviation
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Triumph and Archer is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Group and Archer Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Aviation and Triumph 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 Triumph Group 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 Triumph i.e., Triumph and Archer Aviation go up and down completely randomly.
Pair Corralation between Triumph and Archer Aviation
Considering the 90-day investment horizon Triumph is expected to generate 3.16 times less return on investment than Archer Aviation. But when comparing it to its historical volatility, Triumph Group is 1.81 times less risky than Archer Aviation. It trades about 0.28 of its potential returns per unit of risk. Archer Aviation is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 341.00 in Archer Aviation on August 28, 2024 and sell it today you would earn a total of 407.00 from holding Archer Aviation or generate 119.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Triumph Group vs. Archer Aviation
Performance |
| Timeline |
| Triumph Group |
| Archer Aviation |
Triumph and Archer Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triumph and Archer Aviation
The main advantage of trading using opposite Triumph and Archer Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triumph 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.| Triumph vs. Mercury Systems | Triumph vs. Curtiss Wright | Triumph vs. Hexcel | Triumph vs. Ducommun Incorporated |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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