Correlation Between Howmet Aerospace and Spirit Aerosystems
Can any of the company-specific risk be diversified away by investing in both Howmet Aerospace 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 Howmet Aerospace and Spirit Aerosystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Howmet Aerospace and Spirit Aerosystems Holdings, you can compare the effects of market volatilities on Howmet Aerospace 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 Howmet Aerospace with a short position of Spirit Aerosystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Howmet Aerospace and Spirit Aerosystems.
Diversification Opportunities for Howmet Aerospace and Spirit Aerosystems
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Howmet and Spirit is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Howmet Aerospace and Spirit Aerosystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Aerosystems and Howmet 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 Howmet Aerospace 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 Howmet Aerospace i.e., Howmet Aerospace and Spirit Aerosystems go up and down completely randomly.
Pair Corralation between Howmet Aerospace and Spirit Aerosystems
Considering the 90-day investment horizon Howmet Aerospace is expected to generate 0.84 times more return on investment than Spirit Aerosystems. However, Howmet Aerospace is 1.2 times less risky than Spirit Aerosystems. It trades about 0.16 of its potential returns per unit of risk. Spirit Aerosystems Holdings is currently generating about 0.04 per unit of risk. If you would invest 5,179 in Howmet Aerospace on August 24, 2024 and sell it today you would earn a total of 6,519 from holding Howmet Aerospace or generate 125.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Howmet Aerospace vs. Spirit Aerosystems Holdings
Performance |
| Timeline |
| Howmet Aerospace |
| Spirit Aerosystems |
Howmet Aerospace and Spirit Aerosystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Howmet Aerospace and Spirit Aerosystems
The main advantage of trading using opposite Howmet Aerospace and Spirit Aerosystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Howmet Aerospace 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.| Howmet Aerospace vs. Curtiss Wright | Howmet Aerospace vs. Mercury Systems | Howmet Aerospace vs. AAR Corp | Howmet Aerospace vs. Ducommun Incorporated |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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