Correlation Between Curtiss Wright and Boeing

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

Diversification Opportunities for Curtiss Wright and Boeing

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Curtiss and Boeing is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss-Wright and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Curtiss Wright 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 Curtiss Wright are associated (or correlated) with Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of Curtiss Wright i.e., Curtiss Wright and Boeing go up and down completely randomly.

Pair Corralation between Curtiss Wright and Boeing

Allowing for the 90-day total investment horizon Curtiss Wright is expected to generate 0.55 times more return on investment than Boeing. However, Curtiss Wright is 1.83 times less risky than Boeing. It trades about 0.32 of its potential returns per unit of risk. The Boeing is currently generating about -0.06 per unit of risk. If you would invest  22,609  in Curtiss Wright on November 28, 2023 and sell it today you would earn a total of  1,290  from holding Curtiss Wright or generate 5.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Curtiss-Wright  vs.  The Boeing

 Performance 
       Timeline  
Curtiss-Wright 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Curtiss Wright are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Curtiss Wright showed solid returns over the last few months and may actually be approaching a breakup point.
Boeing 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Curtiss Wright and Boeing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Curtiss Wright and Boeing

The main advantage of trading using opposite Curtiss Wright and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Curtiss Wright position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.
The idea behind Curtiss Wright and The Boeing 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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