Correlation Between A2Z Smart and Spirit Aerosystems

Can any of the company-specific risk be diversified away by investing in both A2Z Smart and Spirit Aerosystems 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 A2Z Smart and Spirit Aerosystems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A2Z Smart Technologies and Spirit Aerosystems Holdings, you can compare the effects of market volatilities on A2Z Smart and Spirit Aerosystems 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 A2Z Smart with a short position of Spirit Aerosystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of A2Z Smart and Spirit Aerosystems.

Diversification Opportunities for A2Z Smart and Spirit Aerosystems

0.24

Correlation Coefficient

A2Z Smart  Spirit Aerosystems

Modest diversification

The 3 months correlation between A2Z and Spirit is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding A2Z Smart Technologies and Spirit Aerosystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Aerosystems and A2Z Smart 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 A2Z Smart Technologies are associated (or correlated) with Spirit Aerosystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirit Aerosystems has no effect on the direction of A2Z Smart i.e., A2Z Smart and Spirit Aerosystems go up and down completely randomly.

Pair Corralation between A2Z Smart and Spirit Aerosystems

Allowing for the 90-day total investment horizon A2Z Smart Technologies is expected to generate 3.49 times more return on investment than Spirit Aerosystems. However, A2Z Smart is 3.49 times more volatile than Spirit Aerosystems Holdings. It trades about 0.04 of its potential returns per unit of risk. Spirit Aerosystems Holdings is currently generating about 0.07 per unit of risk. If you would invest  700.00  in A2Z Smart Technologies on December 26, 2024 and sell it today you would earn a total of  29.00  from holding A2Z Smart Technologies or generate 4.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

A2Z Smart Technologies  vs.  Spirit Aerosystems Holdings

A2Z Smart Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in A2Z Smart Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, A2Z Smart may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Spirit Aerosystems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Spirit Aerosystems Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Spirit Aerosystems is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with A2Z Smart and Spirit Aerosystems

The main advantage of trading using opposite A2Z Smart and Spirit Aerosystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A2Z Smart position performs unexpectedly, Spirit Aerosystems 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 Spirit Aerosystems will offset losses from the drop in Spirit Aerosystems' long position.

The idea behind A2Z Smart Technologies and Spirit Aerosystems Holdings 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.