Correlation Between Vertical Aerospace and Woodward
Can any of the company-specific risk be diversified away by investing in both Vertical Aerospace and Woodward 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 Vertical Aerospace and Woodward into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vertical Aerospace and Woodward, you can compare the effects of market volatilities on Vertical Aerospace and Woodward 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 Vertical Aerospace with a short position of Woodward. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vertical Aerospace and Woodward.
Diversification Opportunities for Vertical Aerospace and Woodward
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vertical and Woodward is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Vertical Aerospace and Woodward in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodward and Vertical Aerospace 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 Vertical Aerospace are associated (or correlated) with Woodward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodward has no effect on the direction of Vertical Aerospace i.e., Vertical Aerospace and Woodward go up and down completely randomly.
Pair Corralation between Vertical Aerospace and Woodward
Given the investment horizon of 90 days Vertical Aerospace is expected to under-perform the Woodward. In addition to that, Vertical Aerospace is 6.68 times more volatile than Woodward. It trades about -0.06 of its total potential returns per unit of risk. Woodward is currently generating about 0.16 per unit of volatility. If you would invest 16,417 in Woodward on August 24, 2024 and sell it today you would earn a total of 837.00 from holding Woodward or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vertical Aerospace vs. Woodward
Performance |
| Timeline |
| Vertical Aerospace |
| Woodward |
Vertical Aerospace and Woodward Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vertical Aerospace and Woodward
The main advantage of trading using opposite Vertical Aerospace and Woodward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertical Aerospace position performs unexpectedly, Woodward 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 Woodward will offset losses from the drop in Woodward's long position.| Vertical Aerospace vs. Archer Aviation | Vertical Aerospace vs. Ehang Holdings | Vertical Aerospace vs. Rocket Lab USA | Vertical Aerospace vs. Lilium NV |
| Woodward vs. Hexcel | Woodward vs. Ducommun Incorporated | Woodward vs. Mercury Systems | Woodward vs. AAR Corp |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Commodity Directory Find actively traded commodities issued by global exchanges |