Correlation Between Redwire Corp and Tat Techno
Can any of the company-specific risk be diversified away by investing in both Redwire Corp and Tat Techno 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 Tat Techno into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redwire Corp and Tat Techno, you can compare the effects of market volatilities on Redwire Corp and Tat Techno 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 Tat Techno. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwire Corp and Tat Techno.
Diversification Opportunities for Redwire Corp and Tat Techno
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Redwire and Tat is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Redwire Corp and Tat Techno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tat Techno 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 Tat Techno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tat Techno has no effect on the direction of Redwire Corp i.e., Redwire Corp and Tat Techno go up and down completely randomly.
Pair Corralation between Redwire Corp and Tat Techno
Considering the 90-day investment horizon Redwire Corp is expected to generate 1.16 times more return on investment than Tat Techno. However, Redwire Corp is 1.16 times more volatile than Tat Techno. It trades about 0.28 of its potential returns per unit of risk. Tat Techno is currently generating about 0.17 per unit of risk. If you would invest 646.00 in Redwire Corp on August 28, 2024 and sell it today you would earn a total of 731.00 from holding Redwire Corp or generate 113.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redwire Corp vs. Tat Techno
Performance |
| Timeline |
| Redwire Corp |
| Tat Techno |
Redwire Corp and Tat Techno Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwire Corp and Tat Techno
The main advantage of trading using opposite Redwire Corp and Tat Techno positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwire Corp position performs unexpectedly, Tat Techno 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 Tat Techno will offset losses from the drop in Tat Techno's long position.| Redwire Corp vs. Sidus Space | Redwire Corp vs. Rocket Lab USA | Redwire Corp vs. Momentus | Redwire Corp vs. Planet Labs PBC |
| Tat Techno vs. Sidus Space | Tat Techno vs. Rocket Lab USA | Tat Techno vs. Momentus | Tat Techno vs. Planet Labs PBC |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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