Correlation Between Astra Space and Aerovironment

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

Diversification Opportunities for Astra Space and Aerovironment

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Astra and Aerovironment is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Astra Space Inc and Aerovironment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovironment and Astra Space 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 Astra Space are associated (or correlated) with Aerovironment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerovironment has no effect on the direction of Astra Space i.e., Astra Space and Aerovironment go up and down completely randomly.

Pair Corralation between Astra Space and Aerovironment

Given the investment horizon of 90 days Astra Space is expected to generate 1.15 times less return on investment than Aerovironment. In addition to that, Astra Space is 2.64 times more volatile than Aerovironment. It trades about 0.1 of its total potential returns per unit of risk. Aerovironment is currently generating about 0.31 per unit of volatility. If you would invest  8,049  in Aerovironment on May 12, 2022 and sell it today you would earn a total of  1,300  from holding Aerovironment or generate 16.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Astra Space Inc  vs.  Aerovironment

 Performance (%) 
       Timeline  
Astra Space 
Astra Performance
0 of 100
Over the last 90 days Astra Space has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in September 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Astra Price Channel

Aerovironment 
Aerovironment Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aerovironment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Aerovironment showed solid returns over the last few months and may actually be approaching a breakup point.

Aerovironment Price Channel

Astra Space and Aerovironment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Astra Space and Aerovironment

The main advantage of trading using opposite Astra Space and Aerovironment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astra Space position performs unexpectedly, Aerovironment 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 Aerovironment will offset losses from the drop in Aerovironment's long position.
The idea behind Astra Space and Aerovironment 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.
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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