Correlation Between Archer Aviation and Moog

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

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

Diversification Opportunities for Archer Aviation and Moog

0.63

Correlation Coefficient

Archer Aviation  Moog

Poor diversification

The 3 months correlation between Archer and Moog is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Archer Aviation and Moog Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moog Inc and Archer Aviation 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 Archer Aviation are associated (or correlated) with Moog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moog Inc has no effect on the direction of Archer Aviation i.e., Archer Aviation and Moog go up and down completely randomly.

Pair Corralation between Archer Aviation and Moog

Given the investment horizon of 90 days Archer Aviation is expected to generate 2.91 times more return on investment than Moog. However, Archer Aviation is 2.91 times more volatile than Moog Inc. It trades about 0.29 of its potential returns per unit of risk. Moog Inc is currently generating about 0.08 per unit of risk. If you would invest  338.00  in Archer Aviation on September 3, 2024 and sell it today you would earn a total of  619.00  from holding Archer Aviation or generate 183.14% return on investment over 90 days.

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

Archer Aviation  vs.  Moog Inc

Archer Aviation

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Aviation are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical indicators, Archer Aviation reported solid returns over the last few months and may actually be approaching a breakup point.

Moog Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Moog Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Moog may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Archer Aviation and Moog

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

The idea behind Archer Aviation and Moog Inc 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.