Correlation Between Curtiss Wright and Tat Techno

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

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

Diversification Opportunities for Curtiss Wright and Tat Techno

0.55

Correlation Coefficient

Curtiss Wright  Tat Techno

Very weak diversification

The 3 months correlation between Curtiss and Tat is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss Wright and Tat Techno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tat Techno 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 Tat Techno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tat Techno has no effect on the direction of Curtiss Wright i.e., Curtiss Wright and Tat Techno go up and down completely randomly.

Pair Corralation between Curtiss Wright and Tat Techno

Allowing for the 90-day total investment horizon Curtiss Wright is expected to generate 2.02 times less return on investment than Tat Techno. But when comparing it to its historical volatility, Curtiss Wright is 2.01 times less risky than Tat Techno. It trades about 0.14 of its potential returns per unit of risk. Tat Techno is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  956.00  in Tat Techno on September 23, 2024 and sell it today you would earn a total of  1,644  from holding Tat Techno or generate 171.97% return on investment over 90 days.

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

Curtiss Wright  vs.  Tat Techno

Curtiss Wright

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Curtiss Wright are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Curtiss Wright may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tat Techno

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Curtiss Wright and Tat Techno

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

The idea behind Curtiss Wright and Tat Techno 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.