Correlation Between V2X and Astronics
Can any of the company-specific risk be diversified away by investing in both V2X and Astronics 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 V2X and Astronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between V2X Inc and Astronics, you can compare the effects of market volatilities on V2X and Astronics 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 V2X with a short position of Astronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of V2X and Astronics.
Diversification Opportunities for V2X and Astronics
Very good diversification
The 3 months correlation between V2X and Astronics is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding V2X Inc and Astronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics and V2X 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 V2X Inc are associated (or correlated) with Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics has no effect on the direction of V2X i.e., V2X and Astronics go up and down completely randomly.
Pair Corralation between V2X and Astronics
Considering the 90-day investment horizon V2X Inc is expected to generate 0.9 times more return on investment than Astronics. However, V2X Inc is 1.11 times less risky than Astronics. It trades about 0.07 of its potential returns per unit of risk. Astronics is currently generating about 0.04 per unit of risk. If you would invest 4,240 in V2X Inc on August 26, 2024 and sell it today you would earn a total of 1,829 from holding V2X Inc or generate 43.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
V2X Inc vs. Astronics
Performance |
| Timeline |
| V2X Inc |
| Astronics |
V2X and Astronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with V2X and Astronics
The main advantage of trading using opposite V2X and Astronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V2X position performs unexpectedly, Astronics 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 Astronics will offset losses from the drop in Astronics' long position.The idea behind V2X Inc and Astronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Astronics vs. Ducommun Incorporated | Astronics vs. Innovative Solutions and | Astronics vs. National Presto Industries | Astronics vs. Park Electrochemical |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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