Correlation Between CPI Aerostructures and Ducommun Incorporated
Can any of the company-specific risk be diversified away by investing in both CPI Aerostructures and Ducommun Incorporated 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 CPI Aerostructures and Ducommun Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPI Aerostructures and Ducommun Incorporated, you can compare the effects of market volatilities on CPI Aerostructures and Ducommun Incorporated 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 CPI Aerostructures with a short position of Ducommun Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPI Aerostructures and Ducommun Incorporated.
Diversification Opportunities for CPI Aerostructures and Ducommun Incorporated
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CPI and Ducommun is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CPI Aerostructures and Ducommun Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducommun Incorporated and CPI Aerostructures 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 CPI Aerostructures are associated (or correlated) with Ducommun Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducommun Incorporated has no effect on the direction of CPI Aerostructures i.e., CPI Aerostructures and Ducommun Incorporated go up and down completely randomly.
Pair Corralation between CPI Aerostructures and Ducommun Incorporated
Considering the 90-day investment horizon CPI Aerostructures is expected to generate 1.58 times more return on investment than Ducommun Incorporated. However, CPI Aerostructures is 1.58 times more volatile than Ducommun Incorporated. It trades about 0.03 of its potential returns per unit of risk. Ducommun Incorporated is currently generating about 0.03 per unit of risk. If you would invest 369.00 in CPI Aerostructures on October 20, 2024 and sell it today you would earn a total of 130.00 from holding CPI Aerostructures or generate 35.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPI Aerostructures vs. Ducommun Incorporated
Performance |
| Timeline |
| CPI Aerostructures |
| Ducommun Incorporated |
CPI Aerostructures and Ducommun Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPI Aerostructures and Ducommun Incorporated
The main advantage of trading using opposite CPI Aerostructures and Ducommun Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPI Aerostructures position performs unexpectedly, Ducommun Incorporated 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 Ducommun Incorporated will offset losses from the drop in Ducommun Incorporated's long position.| CPI Aerostructures vs. Ducommun Incorporated | CPI Aerostructures vs. SIFCO Industries | CPI Aerostructures vs. Innovative Solutions and | CPI Aerostructures vs. Air Industries Group |
| Ducommun Incorporated vs. Innovative Solutions and | Ducommun Incorporated vs. National Presto Industries | Ducommun Incorporated vs. Astronics | Ducommun Incorporated 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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