Correlation Between AAR Corp and Ducommun

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Can any of the company-specific risk be diversified away by investing in both AAR Corp and Ducommun 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 AAR Corp and Ducommun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAR Corp and Ducommun, you can compare the effects of market volatilities on AAR Corp and Ducommun 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 AAR Corp with a short position of Ducommun. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAR Corp and Ducommun.

Diversification Opportunities for AAR Corp and Ducommun

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between AAR Corp and Ducommun is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding AAR Corp and Ducommun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducommun and AAR Corp 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 AAR Corp are associated (or correlated) with Ducommun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducommun has no effect on the direction of AAR Corp i.e., AAR Corp and Ducommun go up and down completely randomly.

Pair Corralation between AAR Corp and Ducommun

Considering the 90-day investment horizon AAR Corp is expected to under-perform the Ducommun. In addition to that, AAR Corp is 1.28 times more volatile than Ducommun. It trades about -0.23 of its total potential returns per unit of risk. Ducommun is currently generating about -0.06 per unit of volatility. If you would invest  4,297  in Ducommun on July 5, 2022 and sell it today you would lose (126.00)  from holding Ducommun or give up 2.93% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

AAR Corp  vs.  Ducommun

 Performance (%) 
       Timeline  
AAR Corp 
AAR Corp Performance
0 of 100
Over the last 90 days AAR Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

AAR Corp Price Channel

Ducommun 
Ducommun Performance
0 of 100
Over the last 90 days Ducommun has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Ducommun is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Ducommun Price Channel

AAR Corp and Ducommun Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AAR Corp and Ducommun

The main advantage of trading using opposite AAR Corp and Ducommun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAR Corp position performs unexpectedly, Ducommun 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 Ducommun will offset losses from the drop in Ducommun's long position.
AAR Corp vs. Amazon Inc
The idea behind AAR Corp and Ducommun pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Ducommun vs. Amazon 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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