Correlation Between Ferguson Plc and Archer Aviation

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

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

Diversification Opportunities for Ferguson Plc and Archer Aviation

0.14

Correlation Coefficient

Ferguson Plc  Archer Aviation

Average diversification

The 3 months correlation between Ferguson and Archer is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ferguson Plc and Archer Aviation WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Aviation WT and Ferguson Plc 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 Ferguson Plc 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 WT has no effect on the direction of Ferguson Plc i.e., Ferguson Plc and Archer Aviation go up and down completely randomly.

Pair Corralation between Ferguson Plc and Archer Aviation

Given the investment horizon of 90 days Ferguson Plc is expected to generate 36.15 times less return on investment than Archer Aviation. But when comparing it to its historical volatility, Ferguson Plc is 7.74 times less risky than Archer Aviation. It trades about 0.04 of its potential returns per unit of risk. Archer Aviation WT is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  239.00  in Archer Aviation WT on October 13, 2024 and sell it today you would earn a total of  107.00  from holding Archer Aviation WT or generate 44.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.64%
Values	Daily Returns

Ferguson Plc  vs.  Archer Aviation WT

Ferguson Plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Archer Aviation WT

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Aviation WT are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Archer Aviation unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ferguson Plc and Archer Aviation

The main advantage of trading using opposite Ferguson Plc and Archer Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferguson Plc 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 Ferguson Plc and Archer Aviation WT 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.