Correlation Between Momentus and HEICO
Can any of the company-specific risk be diversified away by investing in both Momentus and HEICO 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 Momentus and HEICO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Momentus and HEICO, you can compare the effects of market volatilities on Momentus and HEICO 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 Momentus with a short position of HEICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Momentus and HEICO.
Diversification Opportunities for Momentus and HEICO
Good diversification
The 3 months correlation between Momentus and HEICO is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Momentus and HEICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEICO and Momentus 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 Momentus are associated (or correlated) with HEICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEICO has no effect on the direction of Momentus i.e., Momentus and HEICO go up and down completely randomly.
Pair Corralation between Momentus and HEICO
Given the investment horizon of 90 days Momentus is expected to generate 3.52 times more return on investment than HEICO. However, Momentus is 3.52 times more volatile than HEICO. It trades about 0.07 of its potential returns per unit of risk. HEICO is currently generating about 0.23 per unit of risk. If you would invest 52.00 in Momentus on August 31, 2024 and sell it today you would earn a total of 3.00 from holding Momentus or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Momentus vs. HEICO
Performance |
| Timeline |
| Momentus |
| HEICO |
Momentus and HEICO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Momentus and HEICO
The main advantage of trading using opposite Momentus and HEICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Momentus position performs unexpectedly, HEICO 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 HEICO will offset losses from the drop in HEICO's long position.| Momentus vs. Planet Labs PBC | Momentus vs. Rocket Lab USA | Momentus vs. Redwire Corp | Momentus vs. Virgin Galactic Holdings |
| HEICO vs. Vertical Aerospace | HEICO vs. Rolls Royce Holdings plc | HEICO vs. Embraer SA ADR | HEICO vs. Rocket Lab USA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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