Correlation Between Curtiss Wright and Woodward

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

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

Diversification Opportunities for Curtiss Wright and Woodward

0.02

Correlation Coefficient

Curtiss Wright  Woodward

Significant diversification

The 3 months correlation between Curtiss and Woodward is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss Wright and Woodward in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodward 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 Woodward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodward has no effect on the direction of Curtiss Wright i.e., Curtiss Wright and Woodward go up and down completely randomly.

Pair Corralation between Curtiss Wright and Woodward

Allowing for the 90-day total investment horizon Curtiss Wright is expected to under-perform the Woodward. In addition to that, Curtiss Wright is 1.35 times more volatile than Woodward. It trades about -0.07 of its total potential returns per unit of risk. Woodward is currently generating about 0.09 per unit of volatility. If you would invest  16,788  in Woodward on December 28, 2024 and sell it today you would earn a total of  1,541  from holding Woodward or generate 9.18% 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.  Woodward

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.

Woodward

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Woodward are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Woodward may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Curtiss Wright and Woodward

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

The idea behind Curtiss Wright and Woodward 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.