Correlation Between Air Industries and SIFCO Industries
Can any of the company-specific risk be diversified away by investing in both Air Industries and SIFCO Industries 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 Air Industries and SIFCO Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Industries Group and SIFCO Industries, you can compare the effects of market volatilities on Air Industries and SIFCO Industries 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 Air Industries with a short position of SIFCO Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Industries and SIFCO Industries.
Diversification Opportunities for Air Industries and SIFCO Industries
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Air and SIFCO is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Air Industries Group and SIFCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIFCO Industries and Air Industries 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 Air Industries Group are associated (or correlated) with SIFCO Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIFCO Industries has no effect on the direction of Air Industries i.e., Air Industries and SIFCO Industries go up and down completely randomly.
Pair Corralation between Air Industries and SIFCO Industries
Given the investment horizon of 90 days Air Industries Group is expected to under-perform the SIFCO Industries. In addition to that, Air Industries is 1.69 times more volatile than SIFCO Industries. It trades about -0.27 of its total potential returns per unit of risk. SIFCO Industries is currently generating about -0.06 per unit of volatility. If you would invest 408.00 in SIFCO Industries on August 23, 2024 and sell it today you would lose (20.00) from holding SIFCO Industries or give up 4.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Industries Group vs. SIFCO Industries
Performance |
| Timeline |
| Air Industries Group |
| SIFCO Industries |
Air Industries and SIFCO Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Industries and SIFCO Industries
The main advantage of trading using opposite Air Industries and SIFCO Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Industries position performs unexpectedly, SIFCO Industries 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 SIFCO Industries will offset losses from the drop in SIFCO Industries' long position.| Air Industries vs. SIFCO Industries | Air Industries vs. CPI Aerostructures | Air Industries vs. VSE Corporation | Air Industries vs. National Presto Industries |
| SIFCO Industries vs. Ducommun Incorporated | SIFCO Industries vs. Park Electrochemical | SIFCO Industries vs. National Presto Industries | SIFCO Industries vs. Astronics |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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