Correlation Between Aerojet Rocketdyne and Woodward

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Can any of the company-specific risk be diversified away by investing in both Aerojet Rocketdyne and Woodward 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 Aerojet Rocketdyne and Woodward into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerojet Rocketdyne Holdings and Woodward, you can compare the effects of market volatilities on Aerojet Rocketdyne and Woodward 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 Aerojet Rocketdyne with a short position of Woodward. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerojet Rocketdyne and Woodward.

Diversification Opportunities for Aerojet Rocketdyne and Woodward

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Aerojet and Woodward is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aerojet Rocketdyne Holdings and Woodward in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodward and Aerojet Rocketdyne 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 Aerojet Rocketdyne Holdings are associated (or correlated) with Woodward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodward has no effect on the direction of Aerojet Rocketdyne i.e., Aerojet Rocketdyne and Woodward go up and down completely randomly.

Pair Corralation between Aerojet Rocketdyne and Woodward

If you would invest (100.00) in Aerojet Rocketdyne Holdings on November 27, 2024 and sell it today you would earn a total of  100.00  from holding Aerojet Rocketdyne Holdings or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Aerojet Rocketdyne Holdings  vs.  Woodward

 Performance 
       Timeline  
Aerojet Rocketdyne 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Aerojet Rocketdyne Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Aerojet Rocketdyne is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Woodward 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Woodward are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Woodward is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Aerojet Rocketdyne and Woodward Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aerojet Rocketdyne and Woodward

The main advantage of trading using opposite Aerojet Rocketdyne and Woodward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerojet Rocketdyne position performs unexpectedly, Woodward 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 Woodward will offset losses from the drop in Woodward's long position.
The idea behind Aerojet Rocketdyne Holdings and Woodward 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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