Correlation Between AeroVironment and GAZTRTECHNIUADR1/5EO01

Can any of the company-specific risk be diversified away by investing in both AeroVironment and GAZTRTECHNIUADR1/5EO01 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 GAZTRTECHNIUADR1/5EO01 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AeroVironment and GAZTRTECHNIUADR15EO01, you can compare the effects of market volatilities on AeroVironment and GAZTRTECHNIUADR1/5EO01 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 GAZTRTECHNIUADR1/5EO01. Check out your portfolio center. Please also check ongoing floating volatility patterns of AeroVironment and GAZTRTECHNIUADR1/5EO01.

Diversification Opportunities for AeroVironment and GAZTRTECHNIUADR1/5EO01

-0.07

Correlation Coefficient

AeroVironment  GAZTRTECHNIUADR1/5EO01

Good diversification

The 3 months correlation between AeroVironment and GAZTRTECHNIUADR1/5EO01 is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding AeroVironment and GAZTRTECHNIUADR15EO01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAZTRTECHNIUADR1/5EO01 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 GAZTRTECHNIUADR1/5EO01. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAZTRTECHNIUADR1/5EO01 has no effect on the direction of AeroVironment i.e., AeroVironment and GAZTRTECHNIUADR1/5EO01 go up and down completely randomly.

Pair Corralation between AeroVironment and GAZTRTECHNIUADR1/5EO01

Assuming the 90 days horizon AeroVironment is expected to under-perform the GAZTRTECHNIUADR1/5EO01. In addition to that, AeroVironment is 1.21 times more volatile than GAZTRTECHNIUADR15EO01. It trades about -0.14 of its total potential returns per unit of risk. GAZTRTECHNIUADR15EO01 is currently generating about 0.07 per unit of volatility. If you would invest  2,540  in GAZTRTECHNIUADR15EO01 on December 30, 2024 and sell it today you would earn a total of  240.00  from holding GAZTRTECHNIUADR15EO01 or generate 9.45% return on investment over 90 days.

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

AeroVironment  vs.  GAZTRTECHNIUADR15EO01

AeroVironment

Risk-Adjusted Performance

Very Weak

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

GAZTRTECHNIUADR1/5EO01

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GAZTRTECHNIUADR15EO01 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, GAZTRTECHNIUADR1/5EO01 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AeroVironment and GAZTRTECHNIUADR1/5EO01

The main advantage of trading using opposite AeroVironment and GAZTRTECHNIUADR1/5EO01 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AeroVironment position performs unexpectedly, GAZTRTECHNIUADR1/5EO01 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 GAZTRTECHNIUADR1/5EO01 will offset losses from the drop in GAZTRTECHNIUADR1/5EO01's long position.

The idea behind AeroVironment and GAZTRTECHNIUADR15EO01 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.