Correlation Between Spirit Aerosystems and Curtiss Wright

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

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

Diversification Opportunities for Spirit Aerosystems and Curtiss Wright

0.04

Correlation Coefficient

Spirit Aerosystems  Curtiss Wright

Significant diversification

The 3 months correlation between Spirit and Curtiss is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Aerosystems Holdings and Curtiss Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Wright and Spirit Aerosystems 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 Spirit Aerosystems Holdings 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 Spirit Aerosystems i.e., Spirit Aerosystems and Curtiss Wright go up and down completely randomly.

Pair Corralation between Spirit Aerosystems and Curtiss Wright

Considering the 90-day investment horizon Spirit Aerosystems Holdings is expected to generate 0.56 times more return on investment than Curtiss Wright. However, Spirit Aerosystems Holdings is 1.8 times less risky than Curtiss Wright. It trades about 0.06 of its potential returns per unit of risk. Curtiss Wright is currently generating about -0.06 per unit of risk. If you would invest  3,387  in Spirit Aerosystems Holdings on December 28, 2024 and sell it today you would earn a total of  133.00  from holding Spirit Aerosystems Holdings or generate 3.93% return on investment over 90 days.

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

Spirit Aerosystems Holdings  vs.  Curtiss Wright

Spirit Aerosystems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Spirit Aerosystems Holdings are ranked lower than 4 (%) 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.

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 Spirit Aerosystems and Curtiss Wright

The main advantage of trading using opposite Spirit Aerosystems and Curtiss Wright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Aerosystems 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 Spirit Aerosystems Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.