Correlation Between Optex Systems and CPI Aerostructures
Can any of the company-specific risk be diversified away by investing in both Optex Systems 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 Optex Systems and CPI Aerostructures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optex Systems Holdings, and CPI Aerostructures, you can compare the effects of market volatilities on Optex Systems 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 Optex Systems with a short position of CPI Aerostructures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optex Systems and CPI Aerostructures.
Diversification Opportunities for Optex Systems and CPI Aerostructures
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Optex and CPI is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Optex Systems Holdings, and CPI Aerostructures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Aerostructures and Optex Systems 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 Optex Systems Holdings, 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 Optex Systems i.e., Optex Systems and CPI Aerostructures go up and down completely randomly.
Pair Corralation between Optex Systems and CPI Aerostructures
Given the investment horizon of 90 days Optex Systems Holdings, is expected to generate 1.07 times more return on investment than CPI Aerostructures. However, Optex Systems is 1.07 times more volatile than CPI Aerostructures. It trades about 0.1 of its potential returns per unit of risk. CPI Aerostructures is currently generating about 0.02 per unit of risk. If you would invest 309.00 in Optex Systems Holdings, on August 31, 2024 and sell it today you would earn a total of 588.00 from holding Optex Systems Holdings, or generate 190.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optex Systems Holdings, vs. CPI Aerostructures
Performance |
| Timeline |
| Optex Systems Holdings, |
| CPI Aerostructures |
Optex Systems and CPI Aerostructures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optex Systems and CPI Aerostructures
The main advantage of trading using opposite Optex Systems and CPI Aerostructures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optex Systems 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.| Optex Systems vs. CPI Aerostructures | Optex Systems vs. VirTra Inc | Optex Systems vs. Innovative Solutions and | Optex Systems vs. Tat Techno |
| CPI Aerostructures vs. Ducommun Incorporated | CPI Aerostructures vs. SIFCO Industries | CPI Aerostructures vs. Innovative Solutions and | CPI Aerostructures vs. Air Industries Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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