Correlation Between Ammo and Aerojet Rocketdyne

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

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

Diversification Opportunities for Ammo and Aerojet Rocketdyne

0.67

Correlation Coefficient

Ammo  Aerojet Rocketdyne

Poor diversification

The 3 months correlation between Ammo and Aerojet is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ammo Inc and Aerojet Rocketdyne Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerojet Rocketdyne and Ammo 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 Ammo Inc are associated (or correlated) with Aerojet Rocketdyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerojet Rocketdyne has no effect on the direction of Ammo i.e., Ammo and Aerojet Rocketdyne go up and down completely randomly.

Pair Corralation between Ammo and Aerojet Rocketdyne

If you would invest  5,622  in Aerojet Rocketdyne Holdings on September 13, 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	Significant
Accuracy	0.4%
Values	Daily Returns

Ammo Inc  vs.  Aerojet Rocketdyne Holdings

Ammo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ammo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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.

Pair Trading with Ammo and Aerojet Rocketdyne

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

The idea behind Ammo Inc and Aerojet Rocketdyne Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.