Correlation Between AAR Corp and Leonardo DRS,

Can any of the company-specific risk be diversified away by investing in both AAR Corp and Leonardo DRS, 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 Leonardo DRS, into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AAR Corp and Leonardo DRS, Common, you can compare the effects of market volatilities on AAR Corp and Leonardo DRS, 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 Leonardo DRS,. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAR Corp and Leonardo DRS,.

Diversification Opportunities for AAR Corp and Leonardo DRS,

0.69

Correlation Coefficient

AAR Corp  Leonardo DRS,

Poor diversification

The 3 months correlation between AAR and Leonardo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AAR Corp and Leonardo DRS, Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leonardo DRS, Common 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 Leonardo DRS,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leonardo DRS, Common has no effect on the direction of AAR Corp i.e., AAR Corp and Leonardo DRS, go up and down completely randomly.

Pair Corralation between AAR Corp and Leonardo DRS,

Considering the 90-day investment horizon AAR Corp is expected to generate 0.64 times more return on investment than Leonardo DRS,. However, AAR Corp is 1.56 times less risky than Leonardo DRS,. It trades about 0.11 of its potential returns per unit of risk. Leonardo DRS, Common is currently generating about 0.03 per unit of risk. If you would invest  6,112  in AAR Corp on December 28, 2024 and sell it today you would earn a total of  723.00  from holding AAR Corp or generate 11.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

AAR Corp  vs.  Leonardo DRS, Common

AAR Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AAR Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal forward indicators, AAR Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Leonardo DRS, Common

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Leonardo DRS, Common are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Leonardo DRS, is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AAR Corp and Leonardo DRS,

The main advantage of trading using opposite AAR Corp and Leonardo DRS, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAR Corp position performs unexpectedly, Leonardo DRS, 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 Leonardo DRS, will offset losses from the drop in Leonardo DRS,'s long position.

The idea behind AAR Corp and Leonardo DRS, Common 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 the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.