Correlation Between AAR Corp and Willy Food
Can any of the company-specific risk be diversified away by investing in both AAR Corp and Willy Food 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 Willy Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAR Corp and Willy Food, you can compare the effects of market volatilities on AAR Corp and Willy Food 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 Willy Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAR Corp and Willy Food.
Diversification Opportunities for AAR Corp and Willy Food
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AAR and Willy is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding AAR Corp and Willy Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willy Food 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 Willy Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willy Food has no effect on the direction of AAR Corp i.e., AAR Corp and Willy Food go up and down completely randomly.
Pair Corralation between AAR Corp and Willy Food
Considering the 90-day investment horizon AAR Corp is expected to generate 0.7 times more return on investment than Willy Food. However, AAR Corp is 1.43 times less risky than Willy Food. It trades about 0.45 of its potential returns per unit of risk. Willy Food is currently generating about -0.21 per unit of risk. If you would invest 5,952 in AAR Corp on January 25, 2024 and sell it today you would earn a total of 827.00 from holding AAR Corp or generate 13.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
AAR Corp vs. Willy Food
Performance |
| Timeline |
| AAR Corp |
| Willy Food |
AAR Corp and Willy Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAR Corp and Willy Food
The main advantage of trading using opposite AAR Corp and Willy Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAR Corp position performs unexpectedly, Willy Food 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 Willy Food will offset losses from the drop in Willy Food's long position.The idea behind AAR Corp and Willy Food 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.| Willy Food vs. Aryt Industries | Willy Food vs. Scope Metals Group | Willy Food vs. Delek Automotive Systems |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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