Correlation Between Redwire Corp and Sidus Space

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

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

Diversification Opportunities for Redwire Corp and Sidus Space

0.18

Correlation Coefficient

Redwire Corp  Sidus Space

Average diversification

The 3 months correlation between Redwire and Sidus is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Redwire Corp and Sidus Space in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidus Space 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 Sidus Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidus Space has no effect on the direction of Redwire Corp i.e., Redwire Corp and Sidus Space go up and down completely randomly.

Pair Corralation between Redwire Corp and Sidus Space

Considering the 90-day investment horizon Redwire Corp is expected to generate 6.72 times less return on investment than Sidus Space. But when comparing it to its historical volatility, Redwire Corp is 3.27 times less risky than Sidus Space. It trades about 0.05 of its potential returns per unit of risk. Sidus Space is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  150.00  in Sidus Space on November 29, 2024 and sell it today you would earn a total of  72.00  from holding Sidus Space or generate 48.0% return on investment over 90 days.

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

Redwire Corp  vs.  Sidus Space

Redwire Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Redwire Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Redwire Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Sidus Space

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sidus Space are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Sidus Space unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Redwire Corp and Sidus Space

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

The idea behind Redwire Corp and Sidus Space 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..