Correlation Between Ducommun Incorporated and Axon Enterprise

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

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

Diversification Opportunities for Ducommun Incorporated and Axon Enterprise

0.6

Correlation Coefficient

Ducommun Incorporated  Axon Enterprise

Poor diversification

The 3 months correlation between Ducommun and Axon is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ducommun Incorporated and Axon Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axon Enterprise and Ducommun Incorporated 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 Ducommun Incorporated are associated (or correlated) with Axon Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axon Enterprise has no effect on the direction of Ducommun Incorporated i.e., Ducommun Incorporated and Axon Enterprise go up and down completely randomly.

Pair Corralation between Ducommun Incorporated and Axon Enterprise

Considering the 90-day investment horizon Ducommun Incorporated is expected to generate 0.59 times more return on investment than Axon Enterprise. However, Ducommun Incorporated is 1.69 times less risky than Axon Enterprise. It trades about 0.39 of its potential returns per unit of risk. Axon Enterprise is currently generating about 0.14 per unit of risk. If you would invest  6,086  in Ducommun Incorporated on May 6, 2025 and sell it today you would earn a total of  2,872  from holding Ducommun Incorporated or generate 47.19% return on investment over 90 days.

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

Ducommun Incorporated  vs.  Axon Enterprise

Ducommun Incorporated

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Ducommun Incorporated are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Ducommun Incorporated displayed solid returns over the last few months and may actually be approaching a breakup point.

Axon Enterprise

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Axon Enterprise are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Axon Enterprise displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ducommun Incorporated and Axon Enterprise

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

The idea behind Ducommun Incorporated and Axon Enterprise 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.