Correlation Between Curtiss Wright and Alabama Aircraft
Can any of the company-specific risk be diversified away by investing in both Curtiss Wright and Alabama Aircraft 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 Curtiss Wright and Alabama Aircraft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Curtiss Wright and Alabama Aircraft Industries, you can compare the effects of market volatilities on Curtiss Wright and Alabama Aircraft 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 Curtiss Wright with a short position of Alabama Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Curtiss Wright and Alabama Aircraft.
Diversification Opportunities for Curtiss Wright and Alabama Aircraft
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Curtiss and Alabama is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss Wright and Alabama Aircraft Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alabama Aircraft Ind and Curtiss Wright 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 Curtiss Wright are associated (or correlated) with Alabama Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alabama Aircraft Ind has no effect on the direction of Curtiss Wright i.e., Curtiss Wright and Alabama Aircraft go up and down completely randomly.
Pair Corralation between Curtiss Wright and Alabama Aircraft
Allowing for the 90-day total investment horizon Curtiss Wright is expected to generate 0.09 times more return on investment than Alabama Aircraft. However, Curtiss Wright is 10.82 times less risky than Alabama Aircraft. It trades about 0.12 of its potential returns per unit of risk. Alabama Aircraft Industries is currently generating about -0.15 per unit of risk. If you would invest 17,561 in Curtiss Wright on August 26, 2024 and sell it today you would earn a total of 19,521 from holding Curtiss Wright or generate 111.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 9.05% |
| Values | Daily Returns |
Curtiss Wright vs. Alabama Aircraft Industries
Performance |
| Timeline |
| Curtiss Wright |
| Alabama Aircraft Ind |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Curtiss Wright and Alabama Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Curtiss Wright and Alabama Aircraft
The main advantage of trading using opposite Curtiss Wright and Alabama Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Curtiss Wright position performs unexpectedly, Alabama Aircraft 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 Alabama Aircraft will offset losses from the drop in Alabama Aircraft's long position.| Curtiss Wright vs. Mercury Systems | Curtiss Wright vs. AAR Corp | Curtiss Wright vs. Ducommun Incorporated | Curtiss Wright vs. Moog Inc |
| Alabama Aircraft vs. World Houseware Limited | Alabama Aircraft vs. Newell Brands | Alabama Aircraft vs. RBC Bearings Incorporated | Alabama Aircraft vs. Dave Busters Entertainment |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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