Correlation Between Visa and Curtiss Wright
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Curtiss Wright into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Curtiss Wright, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Curtiss Wright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Curtiss Wright.
Diversification Opportunities for Visa and Curtiss Wright
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Curtiss is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Curtiss Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Wright and Visa 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 Visa Class A 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 Visa i.e., Visa and Curtiss Wright go up and down completely randomly.
Pair Corralation between Visa and Curtiss Wright
Taking into account the 90-day investment horizon Visa is expected to generate 1.91 times less return on investment than Curtiss Wright. But when comparing it to its historical volatility, Visa Class A is 1.15 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 0.1 of returns per unit of risk over similar time horizon. If you would invest 13,910 in Curtiss Wright on February 9, 2024 and sell it today you would earn a total of 13,514 from holding Curtiss Wright or generate 97.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Curtiss Wright
Performance |
| Timeline |
| Visa Class A |
| Curtiss Wright |
Visa and Curtiss Wright Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Curtiss Wright
The main advantage of trading using opposite Visa and Curtiss Wright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart HoldingsInc | Visa vs. Ally Financial |
| Curtiss Wright vs. Innovative Solutions and | Curtiss Wright vs. National Presto Industries | Curtiss Wright vs. Hexcel | Curtiss Wright vs. Park Electrochemical |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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