Correlation Between Ametek and Curtiss Wright

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

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

Diversification Opportunities for Ametek and Curtiss Wright

0.85

Correlation Coefficient

Ametek  Curtiss Wright

Very poor diversification

The 3 months correlation between Ametek and Curtiss is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc and Curtiss Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Wright and Ametek 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 Ametek Inc 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 Ametek i.e., Ametek and Curtiss Wright go up and down completely randomly.

Pair Corralation between Ametek and Curtiss Wright

Considering the 90-day investment horizon Ametek Inc is expected to under-perform the Curtiss Wright. But the stock apears to be less risky and, when comparing its historical volatility, Ametek Inc is 1.14 times less risky than Curtiss Wright. The stock trades about -0.15 of its potential returns per unit of risk. The Curtiss Wright is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  24,925  in Curtiss Wright on January 25, 2024 and sell it today you would earn a total of  339.00  from holding Curtiss Wright or generate 1.36% return on investment over 90 days.

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

Ametek Inc  vs.  Curtiss Wright

Ametek Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal primary indicators, Ametek may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Curtiss Wright

Risk-Adjusted Performance

18 of 100

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 unfluctuating basic indicators, Curtiss Wright may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Ametek and Curtiss Wright

The main advantage of trading using opposite Ametek and Curtiss Wright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ametek 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.

The idea behind Ametek Inc and Curtiss Wright 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.