Correlation Between AeroVironment and Sidus Space

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

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

Diversification Opportunities for AeroVironment and Sidus Space

-0.05

Correlation Coefficient

AeroVironment  Sidus Space

Good diversification

The 3 months correlation between AeroVironment and Sidus is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding AeroVironment and Sidus Space in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidus Space and AeroVironment 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 AeroVironment are associated (or correlated) with Sidus Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidus Space has no effect on the direction of AeroVironment i.e., AeroVironment and Sidus Space go up and down completely randomly.

Pair Corralation between AeroVironment and Sidus Space

Given the investment horizon of 90 days AeroVironment is expected to generate 0.4 times more return on investment than Sidus Space. However, AeroVironment is 2.48 times less risky than Sidus Space. It trades about 0.02 of its potential returns per unit of risk. Sidus Space is currently generating about -0.09 per unit of risk. If you would invest  19,226  in AeroVironment on September 2, 2024 and sell it today you would earn a total of  224.00  from holding AeroVironment or generate 1.17% return on investment over 90 days.

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

AeroVironment  vs.  Sidus Space

AeroVironment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AeroVironment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, AeroVironment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sidus Space

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sidus Space has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental 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 AeroVironment and Sidus Space

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

The idea behind AeroVironment and Sidus Space 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.