Correlation Between Intuitive Machines and Redwire Corp

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

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

Diversification Opportunities for Intuitive Machines and Redwire Corp

-0.03

Correlation Coefficient

Intuitive Machines  Redwire Corp

Good diversification

The 3 months correlation between Intuitive and Redwire is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Machines and Redwire Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwire Corp and Intuitive Machines 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 Intuitive Machines are associated (or correlated) with Redwire Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwire Corp has no effect on the direction of Intuitive Machines i.e., Intuitive Machines and Redwire Corp go up and down completely randomly.

Pair Corralation between Intuitive Machines and Redwire Corp

Given the investment horizon of 90 days Intuitive Machines is expected to under-perform the Redwire Corp. In addition to that, Intuitive Machines is 1.29 times more volatile than Redwire Corp. It trades about -0.33 of its total potential returns per unit of risk. Redwire Corp is currently generating about 0.42 per unit of volatility. If you would invest  428.00  in Redwire Corp on March 9, 2024 and sell it today you would earn a total of  110.75  from holding Redwire Corp or generate 25.88% return on investment over 90 days.

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

Intuitive Machines  vs.  Redwire Corp

Intuitive Machines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intuitive Machines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Redwire Corp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Redwire Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Redwire Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intuitive Machines and Redwire Corp

The main advantage of trading using opposite Intuitive Machines and Redwire Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuitive Machines position performs unexpectedly, Redwire Corp 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 Redwire Corp will offset losses from the drop in Redwire Corp's long position.

The idea behind Intuitive Machines and Redwire Corp 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.