Correlation Between DLH Holdings and Joby Aviation

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

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

Diversification Opportunities for DLH Holdings and Joby Aviation

0.4

Correlation Coefficient

DLH Holdings  Joby Aviation

Very weak diversification

The 3 months correlation between DLH and Joby is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding DLH Holdings Corp and Joby Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joby Aviation and DLH Holdings 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 DLH Holdings Corp are associated (or correlated) with Joby Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joby Aviation has no effect on the direction of DLH Holdings i.e., DLH Holdings and Joby Aviation go up and down completely randomly.

Pair Corralation between DLH Holdings and Joby Aviation

Given the investment horizon of 90 days DLH Holdings Corp is expected to under-perform the Joby Aviation. But the stock apears to be less risky and, when comparing its historical volatility, DLH Holdings Corp is 1.88 times less risky than Joby Aviation. The stock trades about -0.05 of its potential returns per unit of risk. The Joby Aviation is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  396.00  in Joby Aviation on November 29, 2024 and sell it today you would earn a total of  279.00  from holding Joby Aviation or generate 70.45% return on investment over 90 days.

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

DLH Holdings Corp  vs.  Joby Aviation

DLH Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days DLH Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Joby Aviation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Joby Aviation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with DLH Holdings and Joby Aviation

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

The idea behind DLH Holdings Corp and Joby 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.