Correlation Between Aerojet Rocketdyne and HEICO

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

By analyzing existing cross correlation between Aerojet Rocketdyne Holdings and HEICO, you can compare the effects of market volatilities on Aerojet Rocketdyne and HEICO 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 Aerojet Rocketdyne with a short position of HEICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerojet Rocketdyne and HEICO.

Diversification Opportunities for Aerojet Rocketdyne and HEICO

-0.47

Correlation Coefficient

Aerojet Rocketdyne  HEICO

Very good diversification

The 3 months correlation between Aerojet and HEICO is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aerojet Rocketdyne Holdings and HEICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEICO and Aerojet Rocketdyne 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 Aerojet Rocketdyne Holdings are associated (or correlated) with HEICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEICO has no effect on the direction of Aerojet Rocketdyne i.e., Aerojet Rocketdyne and HEICO go up and down completely randomly.

Pair Corralation between Aerojet Rocketdyne and HEICO

If you would invest  15,707  in HEICO on October 12, 2024 and sell it today you would earn a total of  2,180  from holding HEICO or generate 13.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.53%
Values	Daily Returns

Aerojet Rocketdyne Holdings  vs.  HEICO

Aerojet Rocketdyne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aerojet Rocketdyne Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Aerojet Rocketdyne is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

HEICO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEICO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aerojet Rocketdyne and HEICO

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

The idea behind Aerojet Rocketdyne Holdings and HEICO 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.