Correlation Between Broadwind Energy and CIRCOR International

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Can any of the company-specific risk be diversified away by investing in both Broadwind Energy and CIRCOR International 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 Broadwind Energy and CIRCOR International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadwind Energy and CIRCOR International, you can compare the effects of market volatilities on Broadwind Energy and CIRCOR International 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 Broadwind Energy with a short position of CIRCOR International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadwind Energy and CIRCOR International.

Diversification Opportunities for Broadwind Energy and CIRCOR International

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Broadwind and CIRCOR is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Broadwind Energy and CIRCOR International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIRCOR International and Broadwind Energy 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 Broadwind Energy are associated (or correlated) with CIRCOR International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIRCOR International has no effect on the direction of Broadwind Energy i.e., Broadwind Energy and CIRCOR International go up and down completely randomly.

Pair Corralation between Broadwind Energy and CIRCOR International

Given the investment horizon of 90 days Broadwind Energy is expected to generate 1.42 times less return on investment than CIRCOR International. In addition to that, Broadwind Energy is 1.62 times more volatile than CIRCOR International. It trades about 0.03 of its total potential returns per unit of risk. CIRCOR International is currently generating about 0.07 per unit of volatility. If you would invest  2,347  in CIRCOR International on December 30, 2023 and sell it today you would earn a total of  3,253  from holding CIRCOR International or generate 138.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy77.53%
ValuesDaily Returns

Broadwind Energy  vs.  CIRCOR International

 Performance 
       Timeline  
Broadwind Energy 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Broadwind Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
CIRCOR International 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days CIRCOR International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, CIRCOR International is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Broadwind Energy and CIRCOR International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Broadwind Energy and CIRCOR International

The main advantage of trading using opposite Broadwind Energy and CIRCOR International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadwind Energy position performs unexpectedly, CIRCOR International 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 CIRCOR International will offset losses from the drop in CIRCOR International's long position.
The idea behind Broadwind Energy and CIRCOR International 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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