Correlation Between Cadre Holdings and Curtiss Wright

Can any of the company-specific risk be diversified away by investing in both Cadre Holdings and Curtiss Wright 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 Cadre Holdings and Curtiss Wright into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Cadre Holdings and Curtiss Wright

0.3

Correlation Coefficient

Cadre Holdings  Curtiss Wright

Weak diversification

The 3 months correlation between Cadre and Curtiss is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cadre Holdings and Curtiss Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Wright and Cadre Holdings 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 Cadre Holdings are associated (or correlated) with Curtiss Wright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curtiss Wright has no effect on the direction of Cadre Holdings i.e., Cadre Holdings and Curtiss Wright go up and down completely randomly.

Pair Corralation between Cadre Holdings and Curtiss Wright

Given the investment horizon of 90 days Cadre Holdings is expected to generate 0.93 times more return on investment than Curtiss Wright. However, Cadre Holdings is 1.07 times less risky than Curtiss Wright. It trades about -0.02 of its potential returns per unit of risk. Curtiss Wright is currently generating about -0.06 per unit of risk. If you would invest  3,197  in Cadre Holdings on December 27, 2024 and sell it today you would lose (132.00) from holding Cadre Holdings or give up 4.13% of portfolio value over 90 days.

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

Cadre Holdings  vs.  Curtiss Wright

Cadre Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cadre Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Cadre Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Curtiss Wright

Risk-Adjusted Performance

Very Weak

Over the last 90 days Curtiss Wright has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Cadre Holdings and Curtiss Wright

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

The idea behind Cadre Holdings and Curtiss Wright 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.