Correlation Between KWESST Micro and SIFCO Industries
Can any of the company-specific risk be diversified away by investing in both KWESST Micro and SIFCO Industries 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 KWESST Micro and SIFCO Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KWESST Micro Systems and SIFCO Industries, you can compare the effects of market volatilities on KWESST Micro and SIFCO Industries 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 KWESST Micro with a short position of SIFCO Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of KWESST Micro and SIFCO Industries.
Diversification Opportunities for KWESST Micro and SIFCO Industries
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KWESST and SIFCO is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding KWESST Micro Systems and SIFCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIFCO Industries and KWESST Micro 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 KWESST Micro Systems are associated (or correlated) with SIFCO Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIFCO Industries has no effect on the direction of KWESST Micro i.e., KWESST Micro and SIFCO Industries go up and down completely randomly.
Pair Corralation between KWESST Micro and SIFCO Industries
Considering the 90-day investment horizon KWESST Micro Systems is expected to generate 6.41 times more return on investment than SIFCO Industries. However, KWESST Micro is 6.41 times more volatile than SIFCO Industries. It trades about -0.02 of its potential returns per unit of risk. SIFCO Industries is currently generating about -0.14 per unit of risk. If you would invest 154.00 in KWESST Micro Systems on August 30, 2024 and sell it today you would lose (83.00) from holding KWESST Micro Systems or give up 53.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KWESST Micro Systems vs. SIFCO Industries
Performance |
| Timeline |
| KWESST Micro Systems |
| SIFCO Industries |
KWESST Micro and SIFCO Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KWESST Micro and SIFCO Industries
The main advantage of trading using opposite KWESST Micro and SIFCO Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KWESST Micro position performs unexpectedly, SIFCO Industries 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 SIFCO Industries will offset losses from the drop in SIFCO Industries' long position.| KWESST Micro vs. Ducommun Incorporated | KWESST Micro vs. Park Electrochemical | KWESST Micro vs. National Presto Industries | KWESST Micro vs. Woodward |
| SIFCO Industries vs. Ducommun Incorporated | SIFCO Industries vs. Park Electrochemical | SIFCO Industries vs. National Presto Industries | SIFCO Industries vs. Astronics |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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