Correlation Between AeroVironment and National Presto
Can any of the company-specific risk be diversified away by investing in both AeroVironment and National Presto 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 AeroVironment and National Presto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AeroVironment and National Presto Industries, you can compare the effects of market volatilities on AeroVironment and National Presto 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 AeroVironment with a short position of National Presto. Check out your portfolio center. Please also check ongoing floating volatility patterns of AeroVironment and National Presto.
Diversification Opportunities for AeroVironment and National Presto
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between AeroVironment and National is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding AeroVironment and National Presto Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Presto Indu and AeroVironment 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 AeroVironment are associated (or correlated) with National Presto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Presto Indu has no effect on the direction of AeroVironment i.e., AeroVironment and National Presto go up and down completely randomly.
Pair Corralation between AeroVironment and National Presto
Given the investment horizon of 90 days AeroVironment is expected to under-perform the National Presto. In addition to that, AeroVironment is 1.34 times more volatile than National Presto Industries. It trades about -0.03 of its total potential returns per unit of risk. National Presto Industries is currently generating about 0.23 per unit of volatility. If you would invest 7,178 in National Presto Industries on September 5, 2024 and sell it today you would earn a total of 1,361 from holding National Presto Industries or generate 18.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
AeroVironment vs. National Presto Industries
Performance |
Timeline |
AeroVironment |
National Presto Indu |
AeroVironment and National Presto Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AeroVironment and National Presto
The main advantage of trading using opposite AeroVironment and National Presto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AeroVironment position performs unexpectedly, National Presto 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 National Presto will offset losses from the drop in National Presto's long position.AeroVironment vs. L3Harris Technologies | AeroVironment vs. Mercury Systems | AeroVironment vs. Textron | AeroVironment vs. HEICO |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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