Correlation Between CAE and Astronics
Can any of the company-specific risk be diversified away by investing in both CAE and Astronics 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 CAE and Astronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAE Inc and Astronics, you can compare the effects of market volatilities on CAE and Astronics 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 CAE with a short position of Astronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAE and Astronics.
Diversification Opportunities for CAE and Astronics
Excellent diversification
The 3 months correlation between CAE and Astronics is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding CAE Inc and Astronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics and CAE 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 CAE Inc are associated (or correlated) with Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics has no effect on the direction of CAE i.e., CAE and Astronics go up and down completely randomly.
Pair Corralation between CAE and Astronics
Considering the 90-day investment horizon CAE is expected to generate 63.29 times less return on investment than Astronics. But when comparing it to its historical volatility, CAE Inc is 1.65 times less risky than Astronics. It trades about 0.01 of its potential returns per unit of risk. Astronics is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,579 in Astronics on November 2, 2024 and sell it today you would earn a total of 196.00 from holding Astronics or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAE Inc vs. Astronics
Performance |
| Timeline |
| CAE Inc |
| Astronics |
CAE and Astronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAE and Astronics
The main advantage of trading using opposite CAE and Astronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAE position performs unexpectedly, Astronics 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 Astronics will offset losses from the drop in Astronics' long position.The idea behind CAE Inc and Astronics 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.| Astronics vs. Ducommun Incorporated | Astronics vs. Innovative Solutions and | Astronics vs. National Presto Industries | Astronics vs. Park Electrochemical |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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