Correlation Between Astronics and AAR Corp
Can any of the company-specific risk be diversified away by investing in both Astronics and AAR Corp 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 Astronics and AAR Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astronics and AAR Corp, you can compare the effects of market volatilities on Astronics and AAR Corp 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 Astronics with a short position of AAR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astronics and AAR Corp.
Diversification Opportunities for Astronics and AAR Corp
Poor diversification
The 3 months correlation between Astronics and AAR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Astronics and AAR Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAR Corp and Astronics 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 Astronics are associated (or correlated) with AAR Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAR Corp has no effect on the direction of Astronics i.e., Astronics and AAR Corp go up and down completely randomly.
Pair Corralation between Astronics and AAR Corp
Given the investment horizon of 90 days Astronics is expected to generate 1.98 times less return on investment than AAR Corp. In addition to that, Astronics is 1.84 times more volatile than AAR Corp. It trades about 0.11 of its total potential returns per unit of risk. AAR Corp is currently generating about 0.41 per unit of volatility. If you would invest 6,175 in AAR Corp on March 25, 2025 and sell it today you would earn a total of 577.00 from holding AAR Corp or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astronics vs. AAR Corp
Performance |
| Timeline |
| Astronics |
| AAR Corp |
Astronics and AAR Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astronics and AAR Corp
The main advantage of trading using opposite Astronics and AAR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astronics position performs unexpectedly, AAR Corp 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 AAR Corp will offset losses from the drop in AAR Corp's long position.| Astronics vs. Ducommun Incorporated | Astronics vs. Innovative Solutions and | Astronics vs. National Presto Industries | Astronics vs. Park Electrochemical |
| AAR Corp vs. Curtiss Wright | AAR Corp vs. Hexcel | AAR Corp vs. Moog Inc | AAR Corp vs. Ducommun Incorporated |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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