Correlation Between Heico and Spirit Aerosystems
Can any of the company-specific risk be diversified away by investing in both Heico and Spirit Aerosystems 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 Spirit Aerosystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heico and Spirit Aerosystems Holdings, you can compare the effects of market volatilities on Heico and Spirit Aerosystems 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 Spirit Aerosystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heico and Spirit Aerosystems.
Diversification Opportunities for Heico and Spirit Aerosystems
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Heico and Spirit is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Heico and Spirit Aerosystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Aerosystems 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 Spirit Aerosystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirit Aerosystems has no effect on the direction of Heico i.e., Heico and Spirit Aerosystems go up and down completely randomly.
Pair Corralation between Heico and Spirit Aerosystems
Considering the 90-day investment horizon Heico is expected to generate 0.42 times more return on investment than Spirit Aerosystems. However, Heico is 2.38 times less risky than Spirit Aerosystems. It trades about 0.08 of its potential returns per unit of risk. Spirit Aerosystems Holdings is currently generating about 0.03 per unit of risk. If you would invest 15,667 in Heico on August 30, 2024 and sell it today you would earn a total of 11,476 from holding Heico or generate 73.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heico vs. Spirit Aerosystems Holdings
Performance |
| Timeline |
| Heico |
| Spirit Aerosystems |
Heico and Spirit Aerosystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heico and Spirit Aerosystems
The main advantage of trading using opposite Heico and Spirit Aerosystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heico position performs unexpectedly, Spirit Aerosystems 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 Spirit Aerosystems will offset losses from the drop in Spirit Aerosystems' long position.The idea behind Heico and Spirit Aerosystems Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Spirit Aerosystems vs. Howmet Aerospace | Spirit Aerosystems vs. Huntington Ingalls Industries | Spirit Aerosystems vs. L3Harris Technologies | Spirit Aerosystems vs. Embraer SA ADR |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |