Correlation Between Eve Holding and Redwire Corp
Can any of the company-specific risk be diversified away by investing in both Eve Holding and Redwire Corp 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 Redwire Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eve Holding and Redwire Corp, you can compare the effects of market volatilities on Eve Holding and Redwire Corp 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 Redwire Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eve Holding and Redwire Corp.
Diversification Opportunities for Eve Holding and Redwire Corp
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eve and Redwire is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Eve Holding and Redwire Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwire Corp 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 Redwire Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwire Corp has no effect on the direction of Eve Holding i.e., Eve Holding and Redwire Corp go up and down completely randomly.
Pair Corralation between Eve Holding and Redwire Corp
Given the investment horizon of 90 days Eve Holding is expected to generate 2.14 times less return on investment than Redwire Corp. But when comparing it to its historical volatility, Eve Holding is 1.01 times less risky than Redwire Corp. It trades about 0.16 of its potential returns per unit of risk. Redwire Corp is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 919.00 in Redwire Corp on August 28, 2024 and sell it today you would earn a total of 458.00 from holding Redwire Corp or generate 49.84% 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. Redwire Corp
Performance |
| Timeline |
| Eve Holding |
| Redwire Corp |
Eve Holding and Redwire Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eve Holding and Redwire Corp
The main advantage of trading using opposite Eve Holding and Redwire Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eve Holding position performs unexpectedly, Redwire Corp 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 Redwire Corp will offset losses from the drop in Redwire Corp's long position.| Eve Holding vs. The Boeing | Eve Holding vs. Curtiss Wright | Eve Holding vs. Ehang Holdings | Eve Holding vs. General Dynamics |
| Redwire Corp vs. Sidus Space | Redwire Corp vs. Rocket Lab USA | Redwire Corp vs. Momentus | Redwire Corp vs. Planet Labs PBC |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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