Correlation Between SIFCO Industries and Redwire Corp
Can any of the company-specific risk be diversified away by investing in both SIFCO Industries and Redwire Corp 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 SIFCO Industries and Redwire Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIFCO Industries and Redwire Corp, you can compare the effects of market volatilities on SIFCO Industries and Redwire Corp 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 SIFCO Industries with a short position of Redwire Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIFCO Industries and Redwire Corp.
Diversification Opportunities for SIFCO Industries and Redwire Corp
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SIFCO and Redwire is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding SIFCO Industries and Redwire Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwire Corp and SIFCO Industries 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 SIFCO Industries are associated (or correlated) with Redwire Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwire Corp has no effect on the direction of SIFCO Industries i.e., SIFCO Industries and Redwire Corp go up and down completely randomly.
Pair Corralation between SIFCO Industries and Redwire Corp
Considering the 90-day investment horizon SIFCO Industries is expected to generate 4.49 times less return on investment than Redwire Corp. But when comparing it to its historical volatility, SIFCO Industries is 1.37 times less risky than Redwire Corp. It trades about 0.06 of its potential returns per unit of risk. Redwire Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 323.00 in Redwire Corp on August 27, 2024 and sell it today you would earn a total of 994.00 from holding Redwire Corp or generate 307.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.94% |
| Values | Daily Returns |
SIFCO Industries vs. Redwire Corp
Performance |
| Timeline |
| SIFCO Industries |
| Redwire Corp |
SIFCO Industries and Redwire Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIFCO Industries and Redwire Corp
The main advantage of trading using opposite SIFCO Industries and Redwire Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIFCO Industries position performs unexpectedly, Redwire Corp 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 Redwire Corp will offset losses from the drop in Redwire Corp's long position.| SIFCO Industries vs. Ducommun Incorporated | SIFCO Industries vs. Park Electrochemical | SIFCO Industries vs. National Presto Industries | SIFCO Industries vs. Astronics |
| Redwire Corp vs. Sidus Space | Redwire Corp vs. Planet Labs PBC | Redwire Corp vs. Intuitive Machines | Redwire Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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