Correlation Between Redwire Corp and Heico

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

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

Diversification Opportunities for Redwire Corp and Heico

-0.67

Correlation Coefficient

Redwire Corp  Heico

Excellent diversification

The 3 months correlation between Redwire and Heico is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Redwire Corp and Heico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heico and Redwire Corp 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 Redwire Corp are associated (or correlated) with Heico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heico has no effect on the direction of Redwire Corp i.e., Redwire Corp and Heico go up and down completely randomly.

Pair Corralation between Redwire Corp and Heico

Considering the 90-day investment horizon Redwire Corp is expected to under-perform the Heico. In addition to that, Redwire Corp is 4.18 times more volatile than Heico. It trades about -0.06 of its total potential returns per unit of risk. Heico is currently generating about 0.1 per unit of volatility. If you would invest  23,959  in Heico on December 28, 2024 and sell it today you would earn a total of  2,904  from holding Heico or generate 12.12% return on investment over 90 days.

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

Redwire Corp  vs.  Heico

Redwire Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Redwire Corp 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 fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Heico

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heico are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Heico demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Redwire Corp and Heico

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

The idea behind Redwire Corp and Heico 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.