Correlation Between Curtiss Wright and Qinetiq Group

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

By analyzing existing cross correlation between Curtiss Wright and Qinetiq Group PLC, you can compare the effects of market volatilities on Curtiss Wright and Qinetiq Group 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 Qinetiq Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Curtiss Wright and Qinetiq Group.

Diversification Opportunities for Curtiss Wright and Qinetiq Group

-0.6

Correlation Coefficient

Curtiss Wright  Qinetiq Group

Excellent diversification

The 3 months correlation between Curtiss and Qinetiq is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss Wright and Qinetiq Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qinetiq Group PLC 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 Qinetiq Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qinetiq Group PLC has no effect on the direction of Curtiss Wright i.e., Curtiss Wright and Qinetiq Group go up and down completely randomly.

Pair Corralation between Curtiss Wright and Qinetiq Group

Allowing for the 90-day total investment horizon Curtiss Wright is expected to under-perform the Qinetiq Group. But the stock apears to be less risky and, when comparing its historical volatility, Curtiss Wright is 2.09 times less risky than Qinetiq Group. The stock trades about -0.05 of its potential returns per unit of risk. The Qinetiq Group PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,089  in Qinetiq Group PLC on December 22, 2024 and sell it today you would lose (104.00) from holding Qinetiq Group PLC or give up 4.98% of portfolio value over 90 days.

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

Curtiss Wright  vs.  Qinetiq Group PLC

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.

Qinetiq Group PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qinetiq Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Qinetiq Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Curtiss Wright and Qinetiq Group

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

The idea behind Curtiss Wright and Qinetiq Group PLC 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.