Correlation Between HEICO and Astronics
Can any of the company-specific risk be diversified away by investing in both HEICO and Astronics 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 HEICO and Astronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEICO and Astronics, you can compare the effects of market volatilities on HEICO and Astronics 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 HEICO with a short position of Astronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEICO and Astronics.
Diversification Opportunities for HEICO and Astronics
Very good diversification
The 3 months correlation between HEICO and Astronics is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding HEICO and Astronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics and HEICO 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 HEICO are associated (or correlated) with Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics has no effect on the direction of HEICO i.e., HEICO and Astronics go up and down completely randomly.
Pair Corralation between HEICO and Astronics
Assuming the 90 days horizon HEICO is expected to generate 0.31 times more return on investment than Astronics. However, HEICO is 3.2 times less risky than Astronics. It trades about 0.31 of its potential returns per unit of risk. Astronics is currently generating about -0.13 per unit of risk. If you would invest 19,436 in HEICO on August 29, 2024 and sell it today you would earn a total of 2,051 from holding HEICO or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HEICO vs. Astronics
Performance |
| Timeline |
| HEICO |
| Astronics |
HEICO and Astronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEICO and Astronics
The main advantage of trading using opposite HEICO and Astronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEICO position performs unexpectedly, Astronics 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 Astronics will offset losses from the drop in Astronics' long position.| HEICO vs. Vertical Aerospace | HEICO vs. Rolls Royce Holdings plc | HEICO vs. Embraer SA ADR | HEICO vs. Rocket Lab USA |
| Astronics vs. Sidus Space | Astronics vs. Rocket Lab USA | Astronics vs. Momentus | Astronics 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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