Correlation Between CPI Aerostructures and Eve Holding
Can any of the company-specific risk be diversified away by investing in both CPI Aerostructures and Eve Holding 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 Eve Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPI Aerostructures and Eve Holding, you can compare the effects of market volatilities on CPI Aerostructures and Eve Holding 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 Eve Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPI Aerostructures and Eve Holding.
Diversification Opportunities for CPI Aerostructures and Eve Holding
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CPI and Eve is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CPI Aerostructures and Eve Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eve Holding 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 Eve Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eve Holding has no effect on the direction of CPI Aerostructures i.e., CPI Aerostructures and Eve Holding go up and down completely randomly.
Pair Corralation between CPI Aerostructures and Eve Holding
Considering the 90-day investment horizon CPI Aerostructures is expected to generate 0.86 times more return on investment than Eve Holding. However, CPI Aerostructures is 1.16 times less risky than Eve Holding. It trades about 0.02 of its potential returns per unit of risk. Eve Holding is currently generating about -0.02 per unit of risk. If you would invest 363.00 in CPI Aerostructures on August 29, 2024 and sell it today you would earn a total of 15.00 from holding CPI Aerostructures or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CPI Aerostructures vs. Eve Holding
Performance |
| Timeline |
| CPI Aerostructures |
| Eve Holding |
CPI Aerostructures and Eve Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPI Aerostructures and Eve Holding
The main advantage of trading using opposite CPI Aerostructures and Eve Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPI Aerostructures position performs unexpectedly, Eve Holding 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 Eve Holding will offset losses from the drop in Eve Holding's long position.| CPI Aerostructures vs. ABIVAX Socit Anonyme | CPI Aerostructures vs. Morningstar Unconstrained Allocation | CPI Aerostructures vs. SPACE | CPI Aerostructures vs. Knife River |
| Eve Holding vs. Heico | Eve Holding vs. Mercury Systems | Eve Holding vs. AeroVironment | Eve Holding vs. Howmet Aerospace |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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