Correlation Between Sturm Ruger and Archer Aviation

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

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

Diversification Opportunities for Sturm Ruger and Archer Aviation

-0.44

Correlation Coefficient

Sturm Ruger  Archer Aviation

Very good diversification

The 3 months correlation between Sturm and Archer is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sturm Ruger and Archer Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Aviation and Sturm Ruger 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 Sturm Ruger 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 Sturm Ruger i.e., Sturm Ruger and Archer Aviation go up and down completely randomly.

Pair Corralation between Sturm Ruger and Archer Aviation

Considering the 90-day investment horizon Sturm Ruger is expected to under-perform the Archer Aviation. But the stock apears to be less risky and, when comparing its historical volatility, Sturm Ruger is 1.87 times less risky than Archer Aviation. The stock trades about -0.08 of its potential returns per unit of risk. The Archer Aviation is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  681.00  in Archer Aviation on February 9, 2025 and sell it today you would earn a total of  200.00  from holding Archer Aviation or generate 29.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sturm Ruger  vs.  Archer Aviation

Sturm Ruger

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sturm Ruger has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Sturm Ruger is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Archer Aviation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Archer Aviation has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Archer Aviation is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sturm Ruger and Archer Aviation

The main advantage of trading using opposite Sturm Ruger and Archer Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sturm Ruger 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 Sturm Ruger 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 Transaction History module to view history of all your transactions and understand their impact on performance.