Correlation Between Huntington Ingalls and AAR Corp

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

Diversification Opportunities for Huntington Ingalls and AAR Corp

0.44
  Correlation Coefficient

Very weak diversification

The @@yvyut months correlation between Huntington and AAR Corp is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Ingalls Industries and AAR Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAR Corp and Huntington Ingalls 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 Huntington Ingalls Industries are associated (or correlated) with AAR Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAR Corp has no effect on the direction of Huntington Ingalls i.e., Huntington Ingalls and AAR Corp go up and down completely randomly.

Pair Corralation between Huntington Ingalls and AAR Corp

Considering the 90-day investment horizon Huntington Ingalls is expected to generate 1.44 times less return on investment than AAR Corp. But when comparing it to its historical volatility, Huntington Ingalls Industries is 1.6 times less risky than AAR Corp. It trades about 0.07 of its potential returns per unit of risk. AAR Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,903  in AAR Corp on June 28, 2022 and sell it today you would earn a total of  1,594  from holding AAR Corp or generate 83.76% return on investment over 90 days.
Time Period@@YVyUt Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Huntington Ingalls Industries  vs.  AAR Corp

 Performance (%) 
       Timeline  
Huntington Ingalls 
Huntington Performance
0 of 100
Over the last 90 days Huntington Ingalls Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Huntington Price Channel

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 weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in October 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

AAR Corp Price Channel

Huntington Ingalls and AAR Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Huntington Ingalls and AAR Corp

The main advantage of trading using opposite Huntington Ingalls and AAR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Ingalls position performs unexpectedly, AAR Corp 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 AAR Corp will offset losses from the drop in AAR Corp's long position.
Huntington Ingalls vs. Kibush Capital Corp
The idea behind Huntington Ingalls Industries and AAR Corp 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.
AAR Corp vs. Kibush Capital 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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