Correlation Between Curtiss Wright and Spirit Aerosystems

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

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

Diversification Opportunities for Curtiss Wright and Spirit Aerosystems

0.04

Correlation Coefficient

Curtiss Wright  Spirit Aerosystems

Significant diversification

The 3 months correlation between Curtiss and Spirit is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss Wright and Spirit Aerosystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Aerosystems 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 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 Curtiss Wright i.e., Curtiss Wright and Spirit Aerosystems go up and down completely randomly.

Pair Corralation between Curtiss Wright and Spirit Aerosystems

Allowing for the 90-day total investment horizon Curtiss Wright is expected to under-perform the Spirit Aerosystems. In addition to that, Curtiss Wright is 1.8 times more volatile than Spirit Aerosystems Holdings. It trades about -0.06 of its total potential returns per unit of risk. Spirit Aerosystems Holdings is currently generating about 0.06 per unit of volatility. If you would invest  3,387  in Spirit Aerosystems Holdings on December 28, 2024 and sell it today you would earn a total of  133.00  from holding Spirit Aerosystems Holdings or generate 3.93% return on investment over 90 days.

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

Curtiss Wright  vs.  Spirit Aerosystems Holdings

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.

Spirit Aerosystems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Spirit Aerosystems Holdings are ranked lower than 4 (%) 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 Curtiss Wright and Spirit Aerosystems

The main advantage of trading using opposite Curtiss Wright and Spirit Aerosystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Curtiss Wright 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 Curtiss Wright 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.