Correlation Between Eve Holding and CPI Aerostructures
Can any of the company-specific risk be diversified away by investing in both Eve Holding and CPI Aerostructures 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 Eve Holding and CPI Aerostructures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eve Holding and CPI Aerostructures, you can compare the effects of market volatilities on Eve Holding and CPI Aerostructures 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 Eve Holding with a short position of CPI Aerostructures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eve Holding and CPI Aerostructures.
Diversification Opportunities for Eve Holding and CPI Aerostructures
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eve and CPI is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Eve Holding and CPI Aerostructures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Aerostructures and Eve Holding 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 Eve Holding are associated (or correlated) with CPI Aerostructures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPI Aerostructures has no effect on the direction of Eve Holding i.e., Eve Holding and CPI Aerostructures go up and down completely randomly.
Pair Corralation between Eve Holding and CPI Aerostructures
Given the investment horizon of 90 days Eve Holding is expected to under-perform the CPI Aerostructures. But the stock apears to be less risky and, when comparing its historical volatility, Eve Holding is 1.29 times less risky than CPI Aerostructures. The stock trades about -0.04 of its potential returns per unit of risk. The CPI Aerostructures is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 322.00 in CPI Aerostructures on August 23, 2024 and sell it today you would earn a total of 48.00 from holding CPI Aerostructures or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eve Holding vs. CPI Aerostructures
Performance |
| Timeline |
| Eve Holding |
| CPI Aerostructures |
Eve Holding and CPI Aerostructures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eve Holding and CPI Aerostructures
The main advantage of trading using opposite Eve Holding and CPI Aerostructures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eve Holding position performs unexpectedly, CPI Aerostructures 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 CPI Aerostructures will offset losses from the drop in CPI Aerostructures' long position.| Eve Holding vs. Heico | Eve Holding vs. Mercury Systems | Eve Holding vs. AeroVironment | Eve Holding vs. Howmet Aerospace |
| CPI Aerostructures vs. Small Cap Core | CPI Aerostructures vs. Freedom Holding Corp | CPI Aerostructures vs. Gfl Environmental Holdings | CPI Aerostructures vs. Growth Fund Of |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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