Correlation Between Innovative Solutions and Curtiss Wright

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

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

Diversification Opportunities for Innovative Solutions and Curtiss Wright

0.04

Correlation Coefficient

Innovative Solutions  Curtiss Wright

Significant diversification

The 3 months correlation between Innovative and Curtiss is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Solutions and and Curtiss Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Wright and Innovative Solutions 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 Innovative Solutions and are associated (or correlated) with Curtiss Wright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curtiss Wright has no effect on the direction of Innovative Solutions i.e., Innovative Solutions and Curtiss Wright go up and down completely randomly.

Pair Corralation between Innovative Solutions and Curtiss Wright

Given the investment horizon of 90 days Innovative Solutions and is expected to under-perform the Curtiss Wright. In addition to that, Innovative Solutions is 2.69 times more volatile than Curtiss Wright. It trades about -0.39 of its total potential returns per unit of risk. Curtiss Wright is currently generating about -0.18 per unit of volatility. If you would invest  34,684  in Curtiss Wright on December 1, 2024 and sell it today you would lose (2,518) from holding Curtiss Wright or give up 7.26% of portfolio value over 90 days.

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

Innovative Solutions and  vs.  Curtiss Wright

Innovative Solutions and

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovative Solutions and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Innovative Solutions is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Innovative Solutions and Curtiss Wright

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

The idea behind Innovative Solutions and and Curtiss Wright 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.