Correlation Between CPI Aerostructures and VirTra
Can any of the company-specific risk be diversified away by investing in both CPI Aerostructures and VirTra 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 VirTra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPI Aerostructures and VirTra Inc, you can compare the effects of market volatilities on CPI Aerostructures and VirTra 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 VirTra. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPI Aerostructures and VirTra.
Diversification Opportunities for CPI Aerostructures and VirTra
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CPI and VirTra is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CPI Aerostructures and VirTra Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VirTra Inc 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 VirTra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VirTra Inc has no effect on the direction of CPI Aerostructures i.e., CPI Aerostructures and VirTra go up and down completely randomly.
Pair Corralation between CPI Aerostructures and VirTra
Considering the 90-day investment horizon CPI Aerostructures is expected to generate 0.62 times more return on investment than VirTra. However, CPI Aerostructures is 1.61 times less risky than VirTra. It trades about 0.08 of its potential returns per unit of risk. VirTra Inc is currently generating about -0.02 per unit of risk. If you would invest 280.00 in CPI Aerostructures on November 3, 2024 and sell it today you would earn a total of 200.00 from holding CPI Aerostructures or generate 71.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPI Aerostructures vs. VirTra Inc
Performance |
| Timeline |
| CPI Aerostructures |
| VirTra Inc |
CPI Aerostructures and VirTra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPI Aerostructures and VirTra
The main advantage of trading using opposite CPI Aerostructures and VirTra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPI Aerostructures position performs unexpectedly, VirTra 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 VirTra will offset losses from the drop in VirTra'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 |
| VirTra vs. Innovative Solutions and | VirTra vs. Park Electrochemical | VirTra vs. Ducommun Incorporated | VirTra vs. National Presto Industries |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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