Correlation Between VSE and Spirit Aerosystems
Can any of the company-specific risk be diversified away by investing in both VSE and Spirit Aerosystems 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 Spirit Aerosystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VSE Corporation and Spirit Aerosystems Holdings, you can compare the effects of market volatilities on VSE and Spirit Aerosystems 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 Spirit Aerosystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of VSE and Spirit Aerosystems.
Diversification Opportunities for VSE and Spirit Aerosystems
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VSE and Spirit is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. and Spirit Aerosystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Aerosystems 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 Spirit Aerosystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirit Aerosystems has no effect on the direction of VSE i.e., VSE and Spirit Aerosystems go up and down completely randomly.
Pair Corralation between VSE and Spirit Aerosystems
Given the investment horizon of 90 days VSE Corporation is expected to generate 0.81 times more return on investment than Spirit Aerosystems. However, VSE Corporation is 1.23 times less risky than Spirit Aerosystems. It trades about 0.08 of its potential returns per unit of risk. Spirit Aerosystems Holdings is currently generating about 0.03 per unit of risk. If you would invest 4,911 in VSE Corporation on August 24, 2024 and sell it today you would earn a total of 6,515 from holding VSE Corporation or generate 132.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VSE Corp. vs. Spirit Aerosystems Holdings
Performance |
| Timeline |
| VSE Corporation |
| Spirit Aerosystems |
VSE and Spirit Aerosystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VSE and Spirit Aerosystems
The main advantage of trading using opposite VSE and Spirit Aerosystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VSE position performs unexpectedly, Spirit Aerosystems 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 Spirit Aerosystems will offset losses from the drop in Spirit Aerosystems' long position.| VSE vs. Park Electrochemical | VSE vs. Innovative Solutions and | VSE vs. Curtiss Wright | VSE vs. National Presto Industries |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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