Correlation Between Air Industries and Aerojet Rocketdyne

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

Diversification Opportunities for Air Industries and Aerojet Rocketdyne

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Air Industries and Aerojet is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Air Industries Group and Aerojet Rocketdyne Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerojet Rocketdyne and Air Industries 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 Air Industries Group are associated (or correlated) with Aerojet Rocketdyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerojet Rocketdyne has no effect on the direction of Air Industries i.e., Air Industries and Aerojet Rocketdyne go up and down completely randomly.

Pair Corralation between Air Industries and Aerojet Rocketdyne

Given the investment horizon of 90 days Air Industries Group is expected to generate 0.93 times more return on investment than Aerojet Rocketdyne. However, Air Industries Group is 1.07 times less risky than Aerojet Rocketdyne. It trades about -0.11 of its potential returns per unit of risk. Aerojet Rocketdyne Holdings is currently generating about -0.23 per unit of risk. If you would invest  69.00  in Air Industries Group on June 26, 2022 and sell it today you would lose (3.00)  from holding Air Industries Group or give up 4.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Air Industries Group  vs.  Aerojet Rocketdyne Holdings

 Performance (%) 
       Timeline  
Air Industries Group 
Air Industries Performance
0 of 100
Over the last 90 days Air Industries Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Air Industries is not utilizing all of its potentials. The new stock price disturbance, may contribute to mid-run losses for the stockholders.

Air Industries Price Channel

Aerojet Rocketdyne 
Aerojet Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aerojet Rocketdyne Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Aerojet Rocketdyne is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

Aerojet Price Channel

Air Industries and Aerojet Rocketdyne Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Air Industries and Aerojet Rocketdyne

The main advantage of trading using opposite Air Industries and Aerojet Rocketdyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Industries position performs unexpectedly, Aerojet Rocketdyne 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 Aerojet Rocketdyne will offset losses from the drop in Aerojet Rocketdyne's long position.
Air Industries vs. Sigma Lithium Corp
The idea behind Air Industries Group and Aerojet Rocketdyne Holdings 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.
Aerojet Rocketdyne vs. Sigma Lithium Corp
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 Piotroski F Score module to get Piotroski F Score based on binary analysis strategy of nine different fundamentals.

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