Correlation Between AEye and Archer Aviation

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

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

Diversification Opportunities for AEye and Archer Aviation

-0.18

Correlation Coefficient

AEye  Archer Aviation

Good diversification

The 3 months correlation between AEye and Archer is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding AEye Inc 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 AEye 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 AEye Inc 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 AEye i.e., AEye and Archer Aviation go up and down completely randomly.

Pair Corralation between AEye and Archer Aviation

Assuming the 90 days horizon AEye Inc is expected to generate 2.06 times more return on investment than Archer Aviation. However, AEye is 2.06 times more volatile than Archer Aviation WT. It trades about 0.3 of its potential returns per unit of risk. Archer Aviation WT is currently generating about 0.27 per unit of risk. If you would invest  0.60  in AEye Inc on October 8, 2024 and sell it today you would earn a total of  12.40  from holding AEye Inc or generate 2066.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	30.65%
Values	Daily Returns

AEye Inc  vs.  Archer Aviation WT

AEye Inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AEye Inc are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AEye showed solid returns over the last few months and may actually be approaching a breakup point.

Archer Aviation WT

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Aviation WT are ranked lower than 21 (%) 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 AEye and Archer Aviation

The main advantage of trading using opposite AEye and Archer Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEye 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 AEye Inc 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.