Correlation Between Southern and Curtiss Wright
Can any of the company-specific risk be diversified away by investing in both Southern 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 Southern and Curtiss Wright into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Company and Curtiss Wright, you can compare the effects of market volatilities on Southern 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 Southern with a short position of Curtiss Wright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern and Curtiss Wright.
Diversification Opportunities for Southern and Curtiss Wright
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southern and Curtiss is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Southern Company and Curtiss Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Wright and Southern 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 Southern Company 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 Southern i.e., Southern and Curtiss Wright go up and down completely randomly.
Pair Corralation between Southern and Curtiss Wright
Allowing for the 90-day total investment horizon Southern is expected to generate 1.33 times less return on investment than Curtiss Wright. In addition to that, Southern is 1.14 times more volatile than Curtiss Wright. It trades about 0.23 of its total potential returns per unit of risk. Curtiss Wright is currently generating about 0.35 per unit of volatility. If you would invest 22,627 in Curtiss Wright on February 8, 2024 and sell it today you would earn a total of 5,032 from holding Curtiss Wright or generate 22.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Company vs. Curtiss Wright
Performance |
| Timeline |
| Southern |
| Curtiss Wright |
Southern and Curtiss Wright Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern and Curtiss Wright
The main advantage of trading using opposite Southern and Curtiss Wright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern 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.| Southern vs. Dominion Energy | Southern vs. American Electric Power | Southern vs. Nextera Energy | Southern vs. Consolidated Edison |
| Curtiss Wright vs. Mercury Systems | Curtiss Wright vs. AAR Corp | Curtiss Wright vs. Ducommun Incorporated | Curtiss Wright vs. Moog Inc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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