Correlation Between AAR Corp and Biotricity
Can any of the company-specific risk be diversified away by investing in both AAR Corp and Biotricity 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 AAR Corp and Biotricity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAR Corp and Biotricity, you can compare the effects of market volatilities on AAR Corp and Biotricity 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 AAR Corp with a short position of Biotricity. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAR Corp and Biotricity.
Diversification Opportunities for AAR Corp and Biotricity
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between AAR and Biotricity is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding AAR Corp and Biotricity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotricity and AAR Corp 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 AAR Corp are associated (or correlated) with Biotricity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotricity has no effect on the direction of AAR Corp i.e., AAR Corp and Biotricity go up and down completely randomly.
Pair Corralation between AAR Corp and Biotricity
Considering the 90-day investment horizon AAR Corp is expected to generate 0.28 times more return on investment than Biotricity. However, AAR Corp is 3.54 times less risky than Biotricity. It trades about 0.05 of its potential returns per unit of risk. Biotricity is currently generating about -0.02 per unit of risk. If you would invest 4,693 in AAR Corp on January 26, 2024 and sell it today you would earn a total of 2,100 from holding AAR Corp or generate 44.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
AAR Corp vs. Biotricity
Performance |
Timeline |
AAR Corp |
Biotricity |
AAR Corp and Biotricity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AAR Corp and Biotricity
The main advantage of trading using opposite AAR Corp and Biotricity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAR Corp position performs unexpectedly, Biotricity 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 Biotricity will offset losses from the drop in Biotricity's long position.AAR Corp vs. HEICO | AAR Corp vs. L3Harris Technologies | AAR Corp vs. Huntington Ingalls Industries | AAR Corp vs. Lockheed Martin |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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