Correlation Between State Street and Curtiss Wright
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Curtiss Wright into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Corp and Curtiss Wright, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Curtiss Wright. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Curtiss Wright.
Diversification Opportunities for State Street and Curtiss Wright
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between State and Curtiss is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding State Street Corp and Curtiss Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Wright and State Street 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 State Street Corp 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 State Street i.e., State Street and Curtiss Wright go up and down completely randomly.
Pair Corralation between State Street and Curtiss Wright
Considering the 90-day investment horizon State Street is expected to generate 4.41 times less return on investment than Curtiss Wright. In addition to that, State Street is 1.57 times more volatile than Curtiss Wright. It trades about 0.02 of its total potential returns per unit of risk. Curtiss Wright is currently generating about 0.11 per unit of volatility. If you would invest 24,513 in Curtiss Wright on January 20, 2024 and sell it today you would earn a total of 511.00 from holding Curtiss Wright or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Corp vs. Curtiss Wright
Performance |
| Timeline |
| State Street Corp |
| Curtiss Wright |
State Street and Curtiss Wright Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Curtiss Wright
The main advantage of trading using opposite State Street and Curtiss Wright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. Northern Trust | State Street vs. Franklin Resources | State Street vs. Invesco Plc | State Street vs. T Rowe Price |
| Curtiss Wright vs. Novocure | Curtiss Wright vs. HubSpot | Curtiss Wright vs. DigitalOcean Holdings | Curtiss Wright vs. Appian Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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