Correlation Between Redwire Corp and SIFCO Industries
Can any of the company-specific risk be diversified away by investing in both Redwire Corp 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 Redwire Corp and SIFCO Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redwire Corp and SIFCO Industries, you can compare the effects of market volatilities on Redwire Corp 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 Redwire Corp with a short position of SIFCO Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwire Corp and SIFCO Industries.
Diversification Opportunities for Redwire Corp and SIFCO Industries
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Redwire and SIFCO is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Redwire Corp and SIFCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIFCO Industries and Redwire Corp 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 Redwire Corp 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 Redwire Corp i.e., Redwire Corp and SIFCO Industries go up and down completely randomly.
Pair Corralation between Redwire Corp and SIFCO Industries
Considering the 90-day investment horizon Redwire Corp is expected to generate 1.6 times more return on investment than SIFCO Industries. However, Redwire Corp is 1.6 times more volatile than SIFCO Industries. It trades about 0.33 of its potential returns per unit of risk. SIFCO Industries is currently generating about -0.14 per unit of risk. If you would invest 687.00 in Redwire Corp on August 30, 2024 and sell it today you would earn a total of 662.00 from holding Redwire Corp or generate 96.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redwire Corp vs. SIFCO Industries
Performance |
| Timeline |
| Redwire Corp |
| SIFCO Industries |
Redwire Corp and SIFCO Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwire Corp and SIFCO Industries
The main advantage of trading using opposite Redwire Corp and SIFCO Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwire Corp 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.| Redwire Corp vs. Sidus Space | Redwire Corp vs. Planet Labs PBC | Redwire Corp vs. Intuitive Machines | Redwire Corp vs. Rocket Lab USA |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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