Correlation Between Sigma Lithium and AAR Corp

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Sigma Lithium 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 Sigma Lithium and AAR Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sigma Lithium Resources and AAR Corp, you can compare the effects of market volatilities on Sigma Lithium 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 Sigma Lithium with a short position of AAR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sigma Lithium and AAR Corp.

Diversification Opportunities for Sigma Lithium and AAR Corp

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Sigma and AAR Corp is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sigma Lithium Resources and AAR Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAR Corp and Sigma Lithium 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 Sigma Lithium Resources 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 Sigma Lithium i.e., Sigma Lithium and AAR Corp go up and down completely randomly.

Pair Corralation between Sigma Lithium and AAR Corp

Given the investment horizon of 90 days Sigma Lithium Resources is expected to generate 2.1 times more return on investment than AAR Corp. However, Sigma Lithium is 2.1 times more volatile than AAR Corp. It trades about 0.14 of its potential returns per unit of risk. AAR Corp is currently generating about 0.07 per unit of risk. If you would invest  902.00  in Sigma Lithium Resources on September 3, 2022 and sell it today you would earn a total of  2,436  from holding Sigma Lithium Resources or generate 270.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.6%
ValuesDaily Returns

Sigma Lithium Resources  vs.  AAR Corp

 Performance (%) 
       Timeline  
Sigma Lithium Resources 
Sigma Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Sigma Lithium Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting primary indicators, Sigma Lithium revealed solid returns over the last few months and may actually be approaching a breakup point.

Sigma Price Channel

AAR Corp 
AAR Corp Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in AAR Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, AAR Corp reported solid returns over the last few months and may actually be approaching a breakup point.

AAR Corp Price Channel

Sigma Lithium and AAR Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sigma Lithium and AAR Corp

The main advantage of trading using opposite Sigma Lithium and AAR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sigma Lithium 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.
Sigma Lithium vs. Linde PLC
Sigma Lithium vs. GROWTH FUND OF
Sigma Lithium vs. IShares SP Mid-Cap
Sigma Lithium vs. VANGUARD SMALL-CAP GROWTH
The idea behind Sigma Lithium Resources 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. Pfizer Inc
AAR Corp vs. Merck Company
AAR Corp vs. Anheuser-Busch InBev SANV
AAR Corp vs. Etsy 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

Other Complementary Tools

Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Go
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go