Correlation Between L3Harris Technologies and CPI Aerostructures
Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies and CPI Aerostructures 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 L3Harris Technologies and CPI Aerostructures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L3Harris Technologies and CPI Aerostructures, you can compare the effects of market volatilities on L3Harris Technologies and CPI Aerostructures 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 L3Harris Technologies with a short position of CPI Aerostructures. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and CPI Aerostructures.
Diversification Opportunities for L3Harris Technologies and CPI Aerostructures
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between L3Harris and CPI is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and CPI Aerostructures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Aerostructures and L3Harris Technologies 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 L3Harris Technologies are associated (or correlated) with CPI Aerostructures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPI Aerostructures has no effect on the direction of L3Harris Technologies i.e., L3Harris Technologies and CPI Aerostructures go up and down completely randomly.
Pair Corralation between L3Harris Technologies and CPI Aerostructures
Considering the 90-day investment horizon L3Harris Technologies is expected to generate 2.19 times less return on investment than CPI Aerostructures. But when comparing it to its historical volatility, L3Harris Technologies is 2.67 times less risky than CPI Aerostructures. It trades about 0.11 of its potential returns per unit of risk. CPI Aerostructures is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 330.00 in CPI Aerostructures on August 26, 2024 and sell it today you would earn a total of 44.00 from holding CPI Aerostructures or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
L3Harris Technologies vs. CPI Aerostructures
Performance |
| Timeline |
| L3Harris Technologies |
| CPI Aerostructures |
L3Harris Technologies and CPI Aerostructures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L3Harris Technologies and CPI Aerostructures
The main advantage of trading using opposite L3Harris Technologies and CPI Aerostructures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies position performs unexpectedly, CPI Aerostructures 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 CPI Aerostructures will offset losses from the drop in CPI Aerostructures' long position.| L3Harris Technologies vs. Lockheed Martin | L3Harris Technologies vs. General Dynamics | L3Harris Technologies vs. Raytheon Technologies Corp | L3Harris Technologies vs. Huntington Ingalls Industries |
| CPI Aerostructures vs. Redwire Corp | CPI Aerostructures vs. Sidus Space | CPI Aerostructures vs. Rocket Lab USA | CPI Aerostructures vs. Momentus |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |