Correlation Between Woodward and SIFCO Industries
Can any of the company-specific risk be diversified away by investing in both Woodward and SIFCO Industries 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 SIFCO Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woodward and SIFCO Industries, you can compare the effects of market volatilities on Woodward and SIFCO Industries 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 SIFCO Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodward and SIFCO Industries.
Diversification Opportunities for Woodward and SIFCO Industries
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woodward and SIFCO is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Woodward and SIFCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIFCO Industries 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 SIFCO Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIFCO Industries has no effect on the direction of Woodward i.e., Woodward and SIFCO Industries go up and down completely randomly.
Pair Corralation between Woodward and SIFCO Industries
Considering the 90-day investment horizon Woodward is expected to generate 1.05 times less return on investment than SIFCO Industries. But when comparing it to its historical volatility, Woodward is 2.04 times less risky than SIFCO Industries. It trades about 0.07 of its potential returns per unit of risk. SIFCO Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 343.00 in SIFCO Industries on August 26, 2024 and sell it today you would earn a total of 58.00 from holding SIFCO Industries or generate 16.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Woodward vs. SIFCO Industries
Performance |
| Timeline |
| Woodward |
| SIFCO Industries |
Woodward and SIFCO Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodward and SIFCO Industries
The main advantage of trading using opposite Woodward and SIFCO Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodward position performs unexpectedly, SIFCO Industries 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 SIFCO Industries will offset losses from the drop in SIFCO Industries' long position.| Woodward vs. Hexcel | Woodward vs. Ducommun Incorporated | Woodward vs. Mercury Systems | Woodward vs. AAR Corp |
| SIFCO Industries vs. Ducommun Incorporated | SIFCO Industries vs. Park Electrochemical | SIFCO Industries vs. National Presto Industries | SIFCO Industries vs. Astronics |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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