Correlation Between Astronics Corp and Electro Optic
Can any of the company-specific risk be diversified away by investing in both Astronics Corp and Electro Optic 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 Astronics Corp and Electro Optic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astronics Corp Cl and Electro Optic Systems, you can compare the effects of market volatilities on Astronics Corp and Electro Optic 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 Astronics Corp with a short position of Electro Optic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astronics Corp and Electro Optic.
Diversification Opportunities for Astronics Corp and Electro Optic
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Astronics and Electro is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Astronics Corp Cl and Electro Optic Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro Optic Systems and Astronics Corp 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 Astronics Corp Cl are associated (or correlated) with Electro Optic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro Optic Systems has no effect on the direction of Astronics Corp i.e., Astronics Corp and Electro Optic go up and down completely randomly.
Pair Corralation between Astronics Corp and Electro Optic
Assuming the 90 days horizon Astronics Corp Cl is expected to generate 2.02 times more return on investment than Electro Optic. However, Astronics Corp is 2.02 times more volatile than Electro Optic Systems. It trades about 0.0 of its potential returns per unit of risk. Electro Optic Systems is currently generating about -0.27 per unit of risk. If you would invest 1,774 in Astronics Corp Cl on August 27, 2024 and sell it today you would lose (59.00) from holding Astronics Corp Cl or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astronics Corp Cl vs. Electro Optic Systems
Performance |
| Timeline |
| Astronics Corp Cl |
| Electro Optic Systems |
Astronics Corp and Electro Optic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astronics Corp and Electro Optic
The main advantage of trading using opposite Astronics Corp and Electro Optic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astronics Corp position performs unexpectedly, Electro Optic 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 Electro Optic will offset losses from the drop in Electro Optic's long position.| Astronics Corp vs. Firan Technology Group | Astronics Corp vs. 808 Renewable Energy | Astronics Corp vs. Park Electrochemical | Astronics Corp vs. Innovative Solutions and |
| Electro Optic vs. Moog Inc | Electro Optic vs. BAE Systems PLC | Electro Optic vs. Park Electrochemical | Electro Optic vs. Triumph Group |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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