Correlation Between VSE and Curtiss Wright

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

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

Diversification Opportunities for VSE and Curtiss Wright

0.41

Correlation Coefficient

VSE  Curtiss Wright

Very weak diversification

The 3 months correlation between VSE and Curtiss is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. and Curtiss Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Wright and VSE 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 VSE Corporation 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 VSE i.e., VSE and Curtiss Wright go up and down completely randomly.

Pair Corralation between VSE and Curtiss Wright

Given the investment horizon of 90 days VSE Corporation is expected to generate 1.4 times more return on investment than Curtiss Wright. However, VSE is 1.4 times more volatile than Curtiss Wright. It trades about 0.02 of its potential returns per unit of risk. Curtiss Wright is currently generating about -0.08 per unit of risk. If you would invest  11,670  in VSE Corporation on December 2, 2024 and sell it today you would earn a total of  180.00  from holding VSE Corporation or generate 1.54% return on investment over 90 days.

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

VSE Corp.  vs.  Curtiss Wright

VSE Corporation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VSE Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, VSE 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 VSE and Curtiss Wright

The main advantage of trading using opposite VSE and Curtiss Wright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VSE 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 VSE Corporation 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.