Correlation Between Hexcel and AAR Corp
Can any of the company-specific risk be diversified away by investing in both Hexcel 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 Hexcel and AAR Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexcel and AAR Corp, you can compare the effects of market volatilities on Hexcel 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 Hexcel with a short position of AAR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexcel and AAR Corp.
Diversification Opportunities for Hexcel and AAR Corp
Very poor diversification
The 3 months correlation between Hexcel and AAR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hexcel and AAR Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAR Corp and Hexcel 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 Hexcel 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 Hexcel i.e., Hexcel and AAR Corp go up and down completely randomly.
Pair Corralation between Hexcel and AAR Corp
Considering the 90-day investment horizon Hexcel is expected to generate 1.08 times less return on investment than AAR Corp. But when comparing it to its historical volatility, Hexcel is 1.31 times less risky than AAR Corp. It trades about 0.16 of its potential returns per unit of risk. AAR Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 7,240 in AAR Corp on June 6, 2025 and sell it today you would earn a total of 397.00 from holding AAR Corp or generate 5.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hexcel vs. AAR Corp
Performance |
| Timeline |
| Hexcel |
| AAR Corp |
Hexcel and AAR Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexcel and AAR Corp
The main advantage of trading using opposite Hexcel and AAR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexcel 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.| Hexcel vs. Curtiss Wright | Hexcel vs. Mercury Systems | Hexcel vs. AAR Corp | Hexcel vs. Ducommun Incorporated |
| AAR Corp vs. Mercury Systems | AAR Corp vs. Curtiss Wright | AAR Corp vs. Hexcel | 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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