Correlation Between CPI Aerostructures and StandardAero,

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

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

Diversification Opportunities for CPI Aerostructures and StandardAero,

-0.8

Correlation Coefficient

CPI Aerostructures  StandardAero,

Pay attention - limited upside

The 3 months correlation between CPI and StandardAero, is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding CPI Aerostructures and StandardAero, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StandardAero, and CPI Aerostructures 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 CPI Aerostructures are associated (or correlated) with StandardAero,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StandardAero, has no effect on the direction of CPI Aerostructures i.e., CPI Aerostructures and StandardAero, go up and down completely randomly.

Pair Corralation between CPI Aerostructures and StandardAero,

Considering the 90-day investment horizon CPI Aerostructures is expected to generate 2.82 times more return on investment than StandardAero,. However, CPI Aerostructures is 2.82 times more volatile than StandardAero,. It trades about 0.31 of its potential returns per unit of risk. StandardAero, is currently generating about -0.03 per unit of risk. If you would invest  386.00  in CPI Aerostructures on October 24, 2024 and sell it today you would earn a total of  113.00  from holding CPI Aerostructures or generate 29.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CPI Aerostructures  vs.  StandardAero,

CPI Aerostructures

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CPI Aerostructures are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, CPI Aerostructures unveiled solid returns over the last few months and may actually be approaching a breakup point.

StandardAero,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StandardAero, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CPI Aerostructures and StandardAero,

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

The idea behind CPI Aerostructures and StandardAero, 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.