Correlation Between Ducommun Incorporated and Archer Aviation

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

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

Diversification Opportunities for Ducommun Incorporated and Archer Aviation

0.41

Correlation Coefficient

Ducommun Incorporated  Archer Aviation

Very weak diversification

The 3 months correlation between Ducommun and Archer is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ducommun Incorporated and Archer Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Aviation and Ducommun Incorporated 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 Ducommun Incorporated are associated (or correlated) with Archer Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Aviation has no effect on the direction of Ducommun Incorporated i.e., Ducommun Incorporated and Archer Aviation go up and down completely randomly.

Pair Corralation between Ducommun Incorporated and Archer Aviation

Considering the 90-day investment horizon Ducommun Incorporated is expected to under-perform the Archer Aviation. But the stock apears to be less risky and, when comparing its historical volatility, Ducommun Incorporated is 4.12 times less risky than Archer Aviation. The stock trades about -0.04 of its potential returns per unit of risk. The Archer Aviation is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  938.00  in Archer Aviation on December 22, 2024 and sell it today you would lose (66.00) from holding Archer Aviation or give up 7.04% of portfolio value over 90 days.

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

Ducommun Incorporated  vs.  Archer Aviation

Ducommun Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ducommun Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Ducommun Incorporated is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Archer Aviation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Aviation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical indicators, Archer Aviation is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ducommun Incorporated and Archer Aviation

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

The idea behind Ducommun Incorporated and Archer Aviation 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.