Correlation Between Eve Holding and Howmet Aerospace
Can any of the company-specific risk be diversified away by investing in both Eve Holding and Howmet Aerospace 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 Howmet Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eve Holding and Howmet Aerospace, you can compare the effects of market volatilities on Eve Holding and Howmet Aerospace 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 Howmet Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eve Holding and Howmet Aerospace.
Diversification Opportunities for Eve Holding and Howmet Aerospace
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eve and Howmet is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eve Holding and Howmet Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Howmet Aerospace 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 Howmet Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Howmet Aerospace has no effect on the direction of Eve Holding i.e., Eve Holding and Howmet Aerospace go up and down completely randomly.
Pair Corralation between Eve Holding and Howmet Aerospace
Given the investment horizon of 90 days Eve Holding is expected to under-perform the Howmet Aerospace. In addition to that, Eve Holding is 1.91 times more volatile than Howmet Aerospace. It trades about -0.03 of its total potential returns per unit of risk. Howmet Aerospace is currently generating about 0.14 per unit of volatility. If you would invest 3,969 in Howmet Aerospace on August 27, 2024 and sell it today you would earn a total of 7,875 from holding Howmet Aerospace or generate 198.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eve Holding vs. Howmet Aerospace
Performance |
| Timeline |
| Eve Holding |
| Howmet Aerospace |
Eve Holding and Howmet Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eve Holding and Howmet Aerospace
The main advantage of trading using opposite Eve Holding and Howmet Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eve Holding position performs unexpectedly, Howmet Aerospace 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 Howmet Aerospace will offset losses from the drop in Howmet Aerospace's long position.| Eve Holding vs. Heico | Eve Holding vs. Mercury Systems | Eve Holding vs. AeroVironment | Eve Holding vs. Howmet Aerospace |
| Howmet Aerospace vs. Curtiss Wright | Howmet Aerospace vs. Mercury Systems | Howmet Aerospace vs. AAR Corp | Howmet Aerospace vs. Ducommun Incorporated |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |