Correlation Between Woodward and National Presto
Can any of the company-specific risk be diversified away by investing in both Woodward and National Presto 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 National Presto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woodward and National Presto Industries, you can compare the effects of market volatilities on Woodward and National Presto 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 National Presto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodward and National Presto.
Diversification Opportunities for Woodward and National Presto
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Woodward and National is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Woodward and National Presto Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Presto Indu 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 National Presto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Presto Indu has no effect on the direction of Woodward i.e., Woodward and National Presto go up and down completely randomly.
Pair Corralation between Woodward and National Presto
Considering the 90-day investment horizon Woodward is expected to generate 0.74 times more return on investment than National Presto. However, Woodward is 1.36 times less risky than National Presto. It trades about 0.29 of its potential returns per unit of risk. National Presto Industries is currently generating about 0.16 per unit of risk. If you would invest 16,464 in Woodward on August 28, 2024 and sell it today you would earn a total of 1,465 from holding Woodward or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woodward vs. National Presto Industries
Performance |
| Timeline |
| Woodward |
| National Presto Indu |
Woodward and National Presto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodward and National Presto
The main advantage of trading using opposite Woodward and National Presto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodward position performs unexpectedly, National Presto 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 National Presto will offset losses from the drop in National Presto's long position.| Woodward vs. Hexcel | Woodward vs. Ducommun Incorporated | Woodward vs. Mercury Systems | Woodward vs. AAR Corp |
| National Presto vs. Park Electrochemical | National Presto vs. Ducommun Incorporated | National Presto vs. Innovative Solutions and | National Presto vs. VSE Corporation |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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