Correlation Between Spirit Aerosystems and Heico
Can any of the company-specific risk be diversified away by investing in both Spirit Aerosystems and Heico 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 Spirit Aerosystems and Heico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirit Aerosystems Holdings and Heico, you can compare the effects of market volatilities on Spirit Aerosystems and Heico 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 Spirit Aerosystems with a short position of Heico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirit Aerosystems and Heico.
Diversification Opportunities for Spirit Aerosystems and Heico
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Spirit and Heico is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Aerosystems Holdings and Heico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heico and Spirit Aerosystems 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 Spirit Aerosystems Holdings are associated (or correlated) with Heico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heico has no effect on the direction of Spirit Aerosystems i.e., Spirit Aerosystems and Heico go up and down completely randomly.
Pair Corralation between Spirit Aerosystems and Heico
Considering the 90-day investment horizon Spirit Aerosystems is expected to generate 2.36 times less return on investment than Heico. In addition to that, Spirit Aerosystems is 2.42 times more volatile than Heico. It trades about 0.01 of its total potential returns per unit of risk. Heico is currently generating about 0.08 per unit of volatility. If you would invest 17,149 in Heico on August 27, 2024 and sell it today you would earn a total of 10,753 from holding Heico or generate 62.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirit Aerosystems Holdings vs. Heico
Performance |
| Timeline |
| Spirit Aerosystems |
| Heico |
Spirit Aerosystems and Heico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirit Aerosystems and Heico
The main advantage of trading using opposite Spirit Aerosystems and Heico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Aerosystems position performs unexpectedly, Heico 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 Heico will offset losses from the drop in Heico's long position.| Spirit Aerosystems vs. Howmet Aerospace | Spirit Aerosystems vs. Huntington Ingalls Industries | Spirit Aerosystems vs. L3Harris Technologies | Spirit Aerosystems vs. Embraer SA ADR |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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