Correlation Between Leonardo DRS, and Spirit Aerosystems

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

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

Diversification Opportunities for Leonardo DRS, and Spirit Aerosystems

-0.24

Correlation Coefficient

Leonardo DRS,  Spirit Aerosystems

Very good diversification

The 3 months correlation between Leonardo and Spirit is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Leonardo DRS, Common and Spirit Aerosystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Aerosystems and Leonardo DRS, 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 Leonardo DRS, Common 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 Leonardo DRS, i.e., Leonardo DRS, and Spirit Aerosystems go up and down completely randomly.

Pair Corralation between Leonardo DRS, and Spirit Aerosystems

Considering the 90-day investment horizon Leonardo DRS, Common is expected to under-perform the Spirit Aerosystems. In addition to that, Leonardo DRS, is 2.97 times more volatile than Spirit Aerosystems Holdings. It trades about -0.08 of its total potential returns per unit of risk. Spirit Aerosystems Holdings is currently generating about 0.09 per unit of volatility. If you would invest  3,236  in Spirit Aerosystems Holdings on November 28, 2024 and sell it today you would earn a total of  161.00  from holding Spirit Aerosystems Holdings or generate 4.98% return on investment over 90 days.

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

Leonardo DRS, Common  vs.  Spirit Aerosystems Holdings

Leonardo DRS, Common

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leonardo DRS, Common 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 comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Spirit Aerosystems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Spirit Aerosystems Holdings are ranked lower than 6 (%) 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 Leonardo DRS, and Spirit Aerosystems

The main advantage of trading using opposite Leonardo DRS, and Spirit Aerosystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leonardo DRS, 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 Leonardo DRS, Common 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.