Correlation Between Curtiss Wright and Brinks

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

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

Diversification Opportunities for Curtiss Wright and Brinks

0.23

Correlation Coefficient

Curtiss Wright  Brinks

Modest diversification

The 3 months correlation between Curtiss and Brinks is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss Wright and Brinks Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks Company and Curtiss Wright 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 Curtiss Wright are associated (or correlated) with Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks Company has no effect on the direction of Curtiss Wright i.e., Curtiss Wright and Brinks go up and down completely randomly.

Pair Corralation between Curtiss Wright and Brinks

Allowing for the 90-day total investment horizon Curtiss Wright is expected to under-perform the Brinks. In addition to that, Curtiss Wright is 1.65 times more volatile than Brinks Company. It trades about -0.11 of its total potential returns per unit of risk. Brinks Company is currently generating about -0.01 per unit of volatility. If you would invest  9,596  in Brinks Company on November 27, 2024 and sell it today you would lose (151.00) from holding Brinks Company or give up 1.57% of portfolio value over 90 days.

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

Curtiss Wright  vs.  Brinks Company

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 weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Brinks Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brinks Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Brinks is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Curtiss Wright and Brinks

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

The idea behind Curtiss Wright and Brinks Company 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.