Correlation Between VirTra and CPI Aerostructures
Can any of the company-specific risk be diversified away by investing in both VirTra 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 VirTra and CPI Aerostructures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VirTra Inc and CPI Aerostructures, you can compare the effects of market volatilities on VirTra 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 VirTra with a short position of CPI Aerostructures. Check out your portfolio center. Please also check ongoing floating volatility patterns of VirTra and CPI Aerostructures.
Diversification Opportunities for VirTra and CPI Aerostructures
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between VirTra and CPI is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding VirTra Inc and CPI Aerostructures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Aerostructures and VirTra 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 VirTra Inc 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 VirTra i.e., VirTra and CPI Aerostructures go up and down completely randomly.
Pair Corralation between VirTra and CPI Aerostructures
Given the investment horizon of 90 days VirTra Inc is expected to generate 1.49 times more return on investment than CPI Aerostructures. However, VirTra is 1.49 times more volatile than CPI Aerostructures. It trades about 0.04 of its potential returns per unit of risk. CPI Aerostructures is currently generating about 0.02 per unit of risk. If you would invest 460.00 in VirTra Inc on August 25, 2024 and sell it today you would earn a total of 311.00 from holding VirTra Inc or generate 67.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VirTra Inc vs. CPI Aerostructures
Performance |
| Timeline |
| VirTra Inc |
| CPI Aerostructures |
VirTra and CPI Aerostructures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VirTra and CPI Aerostructures
The main advantage of trading using opposite VirTra and CPI Aerostructures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VirTra 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.| VirTra vs. Innovative Solutions and | VirTra vs. Park Electrochemical | VirTra vs. Ducommun Incorporated | VirTra vs. National Presto Industries |
| CPI Aerostructures vs. Ducommun Incorporated | CPI Aerostructures vs. SIFCO Industries | CPI Aerostructures vs. Innovative Solutions and | CPI Aerostructures vs. Air Industries Group |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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