Correlation Between Curtiss Wright and Thermo Fisher

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Can any of the company-specific risk be diversified away by investing in both Curtiss Wright and Thermo Fisher 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 Curtiss Wright and Thermo Fisher into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Curtiss Wright and Thermo Fisher Scientific, you can compare the effects of market volatilities on Curtiss Wright and Thermo Fisher 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 Curtiss Wright with a short position of Thermo Fisher. Check out your portfolio center. Please also check ongoing floating volatility patterns of Curtiss Wright and Thermo Fisher.

Diversification Opportunities for Curtiss Wright and Thermo Fisher

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Curtiss and Thermo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss-Wright and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific and Curtiss Wright 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 Curtiss Wright are associated (or correlated) with Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of Curtiss Wright i.e., Curtiss Wright and Thermo Fisher go up and down completely randomly.

Pair Corralation between Curtiss Wright and Thermo Fisher

Allowing for the 90-day total investment horizon Curtiss Wright is expected to generate 0.83 times more return on investment than Thermo Fisher. However, Curtiss Wright is 1.21 times less risky than Thermo Fisher. It trades about 0.45 of its potential returns per unit of risk. Thermo Fisher Scientific is currently generating about 0.13 per unit of risk. If you would invest  23,603  in Curtiss Wright on December 29, 2023 and sell it today you would earn a total of  1,754  from holding Curtiss Wright or generate 7.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Curtiss-Wright  vs.  Thermo Fisher Scientific

 Performance 
       Timeline  
Curtiss-Wright 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Curtiss Wright are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Curtiss Wright showed solid returns over the last few months and may actually be approaching a breakup point.
Thermo Fisher Scientific 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Thermo Fisher Scientific are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Thermo Fisher may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Curtiss Wright and Thermo Fisher Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Curtiss Wright and Thermo Fisher

The main advantage of trading using opposite Curtiss Wright and Thermo Fisher positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Curtiss Wright position performs unexpectedly, Thermo Fisher 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 Thermo Fisher will offset losses from the drop in Thermo Fisher's long position.
The idea behind Curtiss Wright and Thermo Fisher Scientific 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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