Correlation Between Redwire Corp and Servotronics
Can any of the company-specific risk be diversified away by investing in both Redwire Corp and Servotronics 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 Servotronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redwire Corp and Servotronics, you can compare the effects of market volatilities on Redwire Corp and Servotronics 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 Servotronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwire Corp and Servotronics.
Diversification Opportunities for Redwire Corp and Servotronics
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Redwire and Servotronics is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Redwire Corp and Servotronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Servotronics 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 Servotronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Servotronics has no effect on the direction of Redwire Corp i.e., Redwire Corp and Servotronics go up and down completely randomly.
Pair Corralation between Redwire Corp and Servotronics
Considering the 90-day investment horizon Redwire Corp is expected to generate 1.69 times more return on investment than Servotronics. However, Redwire Corp is 1.69 times more volatile than Servotronics. It trades about 0.35 of its potential returns per unit of risk. Servotronics is currently generating about -0.03 per unit of risk. If you would invest 919.00 in Redwire Corp on August 28, 2024 and sell it today you would earn a total of 458.00 from holding Redwire Corp or generate 49.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redwire Corp vs. Servotronics
Performance |
| Timeline |
| Redwire Corp |
| Servotronics |
Redwire Corp and Servotronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwire Corp and Servotronics
The main advantage of trading using opposite Redwire Corp and Servotronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwire Corp position performs unexpectedly, Servotronics 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 Servotronics will offset losses from the drop in Servotronics' long position.| Redwire Corp vs. Sidus Space | Redwire Corp vs. Planet Labs PBC | Redwire Corp vs. Intuitive Machines | Redwire Corp vs. Rocket Lab USA |
| Servotronics vs. Energizer Holdings | Servotronics vs. Acuity Brands | Servotronics vs. Espey Mfg Electronics | Servotronics vs. Preformed Line Products |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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