Correlation Between Curtiss Wright and AeroVironment
Can any of the company-specific risk be diversified away by investing in both Curtiss Wright and AeroVironment 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 AeroVironment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Curtiss Wright and AeroVironment, you can compare the effects of market volatilities on Curtiss Wright and AeroVironment 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 AeroVironment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Curtiss Wright and AeroVironment.
Diversification Opportunities for Curtiss Wright and AeroVironment
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Curtiss and AeroVironment is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss Wright and AeroVironment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroVironment 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 AeroVironment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AeroVironment has no effect on the direction of Curtiss Wright i.e., Curtiss Wright and AeroVironment go up and down completely randomly.
Pair Corralation between Curtiss Wright and AeroVironment
Allowing for the 90-day total investment horizon Curtiss Wright is expected to generate 1.14 times less return on investment than AeroVironment. But when comparing it to its historical volatility, Curtiss Wright is 2.27 times less risky than AeroVironment. It trades about 0.17 of its potential returns per unit of risk. AeroVironment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 12,679 in AeroVironment on August 27, 2024 and sell it today you would earn a total of 6,912 from holding AeroVironment or generate 54.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Curtiss Wright vs. AeroVironment
Performance |
| Timeline |
| Curtiss Wright |
| AeroVironment |
Curtiss Wright and AeroVironment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Curtiss Wright and AeroVironment
The main advantage of trading using opposite Curtiss Wright and AeroVironment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Curtiss Wright position performs unexpectedly, AeroVironment 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 AeroVironment will offset losses from the drop in AeroVironment's long position.| Curtiss Wright vs. Mercury Systems | Curtiss Wright vs. AAR Corp | Curtiss Wright vs. Ducommun Incorporated | Curtiss Wright vs. Moog Inc |
| AeroVironment vs. L3Harris Technologies | AeroVironment vs. Mercury Systems | AeroVironment vs. Textron | AeroVironment vs. HEICO |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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