Correlation Between Sturm Ruger and New Horizon

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

By analyzing existing cross correlation between Sturm Ruger and New Horizon Aircraft, you can compare the effects of market volatilities on Sturm Ruger and New Horizon 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 Sturm Ruger with a short position of New Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sturm Ruger and New Horizon.

Diversification Opportunities for Sturm Ruger and New Horizon

-0.35

Correlation Coefficient

Sturm Ruger  New Horizon

Very good diversification

The 3 months correlation between Sturm and New is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sturm Ruger and New Horizon Aircraft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Horizon Aircraft and Sturm Ruger 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 Sturm Ruger are associated (or correlated) with New Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Horizon Aircraft has no effect on the direction of Sturm Ruger i.e., Sturm Ruger and New Horizon go up and down completely randomly.

Pair Corralation between Sturm Ruger and New Horizon

Considering the 90-day investment horizon Sturm Ruger is expected to under-perform the New Horizon. But the stock apears to be less risky and, when comparing its historical volatility, Sturm Ruger is 7.92 times less risky than New Horizon. The stock trades about -0.17 of its potential returns per unit of risk. The New Horizon Aircraft is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  30.00  in New Horizon Aircraft on September 13, 2024 and sell it today you would earn a total of  28.00  from holding New Horizon Aircraft or generate 93.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Sturm Ruger  vs.  New Horizon Aircraft

Sturm Ruger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sturm Ruger has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

New Horizon Aircraft

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Horizon Aircraft are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, New Horizon may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sturm Ruger and New Horizon

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

The idea behind Sturm Ruger and New Horizon Aircraft 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.