Correlation Between Aerojet Rocketdyne and Nauticus Robotics

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

By analyzing existing cross correlation between Aerojet Rocketdyne Holdings and Nauticus Robotics, you can compare the effects of market volatilities on Aerojet Rocketdyne and Nauticus Robotics 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 Aerojet Rocketdyne with a short position of Nauticus Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerojet Rocketdyne and Nauticus Robotics.

Diversification Opportunities for Aerojet Rocketdyne and Nauticus Robotics

0.27

Correlation Coefficient

Aerojet Rocketdyne  Nauticus Robotics

Modest diversification

The 3 months correlation between Aerojet and Nauticus is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aerojet Rocketdyne Holdings and Nauticus Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nauticus Robotics and Aerojet Rocketdyne 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 Aerojet Rocketdyne Holdings are associated (or correlated) with Nauticus Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nauticus Robotics has no effect on the direction of Aerojet Rocketdyne i.e., Aerojet Rocketdyne and Nauticus Robotics go up and down completely randomly.

Pair Corralation between Aerojet Rocketdyne and Nauticus Robotics

If you would invest  5,622  in Aerojet Rocketdyne Holdings on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Aerojet Rocketdyne Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Aerojet Rocketdyne Holdings  vs.  Nauticus Robotics

Aerojet Rocketdyne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aerojet Rocketdyne Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Aerojet Rocketdyne is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nauticus Robotics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nauticus Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aerojet Rocketdyne and Nauticus Robotics

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

The idea behind Aerojet Rocketdyne Holdings and Nauticus Robotics 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.