Correlation Between CPI Aerostructures and Hexcel
Can any of the company-specific risk be diversified away by investing in both CPI Aerostructures and Hexcel 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 Hexcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPI Aerostructures and Hexcel, you can compare the effects of market volatilities on CPI Aerostructures and Hexcel 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 Hexcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPI Aerostructures and Hexcel.
Diversification Opportunities for CPI Aerostructures and Hexcel
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CPI and Hexcel is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CPI Aerostructures and Hexcel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel 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 Hexcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel has no effect on the direction of CPI Aerostructures i.e., CPI Aerostructures and Hexcel go up and down completely randomly.
Pair Corralation between CPI Aerostructures and Hexcel
Considering the 90-day investment horizon CPI Aerostructures is expected to generate 1.63 times more return on investment than Hexcel. However, CPI Aerostructures is 1.63 times more volatile than Hexcel. It trades about 0.04 of its potential returns per unit of risk. Hexcel is currently generating about 0.01 per unit of risk. If you would invest 302.00 in CPI Aerostructures on August 26, 2024 and sell it today you would earn a total of 72.00 from holding CPI Aerostructures or generate 23.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPI Aerostructures vs. Hexcel
Performance |
| Timeline |
| CPI Aerostructures |
| Hexcel |
CPI Aerostructures and Hexcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPI Aerostructures and Hexcel
The main advantage of trading using opposite CPI Aerostructures and Hexcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPI Aerostructures position performs unexpectedly, Hexcel 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 Hexcel will offset losses from the drop in Hexcel's long position.| CPI Aerostructures vs. Redwire Corp | CPI Aerostructures vs. Sidus Space | CPI Aerostructures vs. Rocket Lab USA | CPI Aerostructures vs. Momentus |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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