Correlation Between VSE and CPI Aerostructures
Can any of the company-specific risk be diversified away by investing in both VSE and CPI Aerostructures 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 VSE and CPI Aerostructures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VSE Corporation and CPI Aerostructures, you can compare the effects of market volatilities on VSE and CPI Aerostructures 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 VSE with a short position of CPI Aerostructures. Check out your portfolio center. Please also check ongoing floating volatility patterns of VSE and CPI Aerostructures.
Diversification Opportunities for VSE and CPI Aerostructures
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between VSE and CPI is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. and CPI Aerostructures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Aerostructures and VSE 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 VSE Corporation are associated (or correlated) with CPI Aerostructures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPI Aerostructures has no effect on the direction of VSE i.e., VSE and CPI Aerostructures go up and down completely randomly.
Pair Corralation between VSE and CPI Aerostructures
Given the investment horizon of 90 days VSE Corporation is expected to generate 0.88 times more return on investment than CPI Aerostructures. However, VSE Corporation is 1.14 times less risky than CPI Aerostructures. It trades about 0.12 of its potential returns per unit of risk. CPI Aerostructures is currently generating about 0.08 per unit of risk. If you would invest 6,013 in VSE Corporation on August 26, 2024 and sell it today you would earn a total of 5,685 from holding VSE Corporation or generate 94.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VSE Corp. vs. CPI Aerostructures
Performance |
| Timeline |
| VSE Corporation |
| CPI Aerostructures |
VSE and CPI Aerostructures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VSE and CPI Aerostructures
The main advantage of trading using opposite VSE and CPI Aerostructures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VSE position performs unexpectedly, CPI Aerostructures 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 CPI Aerostructures will offset losses from the drop in CPI Aerostructures' long position.| VSE vs. Park Electrochemical | VSE vs. Innovative Solutions and | VSE vs. Curtiss Wright | VSE vs. National Presto Industries |
| CPI Aerostructures vs. Redwire Corp | CPI Aerostructures vs. Sidus Space | CPI Aerostructures vs. Rocket Lab USA | CPI Aerostructures vs. Momentus |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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