Correlation Between Woodward and KWESST Micro
Can any of the company-specific risk be diversified away by investing in both Woodward and KWESST Micro 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 Woodward and KWESST Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woodward and KWESST Micro Systems, you can compare the effects of market volatilities on Woodward and KWESST Micro 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 Woodward with a short position of KWESST Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodward and KWESST Micro.
Diversification Opportunities for Woodward and KWESST Micro
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Woodward and KWESST is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Woodward and KWESST Micro Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KWESST Micro Systems and Woodward 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 Woodward are associated (or correlated) with KWESST Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KWESST Micro Systems has no effect on the direction of Woodward i.e., Woodward and KWESST Micro go up and down completely randomly.
Pair Corralation between Woodward and KWESST Micro
Considering the 90-day investment horizon Woodward is expected to generate 0.09 times more return on investment than KWESST Micro. However, Woodward is 11.74 times less risky than KWESST Micro. It trades about 0.07 of its potential returns per unit of risk. KWESST Micro Systems is currently generating about -0.02 per unit of risk. If you would invest 17,126 in Woodward on August 30, 2024 and sell it today you would earn a total of 779.00 from holding Woodward or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woodward vs. KWESST Micro Systems
Performance |
| Timeline |
| Woodward |
| KWESST Micro Systems |
Woodward and KWESST Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodward and KWESST Micro
The main advantage of trading using opposite Woodward and KWESST Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodward position performs unexpectedly, KWESST Micro 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 KWESST Micro will offset losses from the drop in KWESST Micro's long position.| Woodward vs. Hexcel | Woodward vs. Ducommun Incorporated | Woodward vs. Mercury Systems | Woodward vs. AAR Corp |
| KWESST Micro vs. Ducommun Incorporated | KWESST Micro vs. Park Electrochemical | KWESST Micro vs. National Presto Industries | KWESST Micro vs. Woodward |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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