Correlation Between Joby Aviation and Archer Aviation

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

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

Diversification Opportunities for Joby Aviation and Archer Aviation

0.85

Correlation Coefficient

Joby Aviation  Archer Aviation

Very poor diversification

The 3 months correlation between Joby and Archer is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Joby Aviation and Archer Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Aviation and Joby 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 Joby Aviation are associated (or correlated) with Archer Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Aviation has no effect on the direction of Joby Aviation i.e., Joby Aviation and Archer Aviation go up and down completely randomly.

Pair Corralation between Joby Aviation and Archer Aviation

Given the investment horizon of 90 days Joby Aviation is expected to generate 1.64 times less return on investment than Archer Aviation. In addition to that, Joby Aviation is 1.04 times more volatile than Archer Aviation. It trades about 0.15 of its total potential returns per unit of risk. Archer Aviation is currently generating about 0.25 per unit of volatility. If you would invest  340.00  in Archer Aviation on August 30, 2024 and sell it today you would earn a total of  468.00  from holding Archer Aviation or generate 137.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Joby Aviation  vs.  Archer Aviation

Joby Aviation

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Joby Aviation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Joby Aviation showed solid returns over the last few months and may actually be approaching a breakup point.

Archer Aviation

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Aviation are ranked lower than 19 (%) 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.

Pair Trading with Joby Aviation and Archer Aviation

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

The idea behind Joby Aviation and Archer Aviation 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.