Correlation Between Textron and HEICO
Can any of the company-specific risk be diversified away by investing in both Textron 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 Textron and HEICO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Textron and HEICO, you can compare the effects of market volatilities on Textron 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 Textron with a short position of HEICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Textron and HEICO.
Diversification Opportunities for Textron and HEICO
Very poor diversification
The 3 months correlation between Textron and HEICO is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Textron and HEICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEICO and Textron 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 Textron 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 Textron i.e., Textron and HEICO go up and down completely randomly.
Pair Corralation between Textron and HEICO
Considering the 90-day investment horizon Textron is expected to under-perform the HEICO. In addition to that, Textron is 1.18 times more volatile than HEICO. It trades about -0.31 of its total potential returns per unit of risk. HEICO is currently generating about -0.23 per unit of volatility. If you would invest 18,803 in HEICO on November 18, 2024 and sell it today you would lose (1,035) from holding HEICO or give up 5.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Textron vs. HEICO
Performance |
| Timeline |
| Textron |
| HEICO |
Textron and HEICO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Textron and HEICO
The main advantage of trading using opposite Textron and HEICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Textron 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.| Textron vs. Hexcel | Textron vs. Huntington Ingalls Industries | Textron vs. Curtiss Wright | Textron vs. Mercury Systems |
| HEICO vs. Vertical Aerospace | HEICO vs. Rolls Royce Holdings plc | HEICO vs. Embraer SA ADR | HEICO 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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