Correlation Between Hillenbrand and Curtiss Wright

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

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

Diversification Opportunities for Hillenbrand and Curtiss Wright

0.8

Correlation Coefficient

Hillenbrand  Curtiss Wright

Very poor diversification

The 3 months correlation between Hillenbrand and Curtiss is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand and Curtiss Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Wright and Hillenbrand 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 Hillenbrand 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 Hillenbrand i.e., Hillenbrand and Curtiss Wright go up and down completely randomly.

Pair Corralation between Hillenbrand and Curtiss Wright

Allowing for the 90-day total investment horizon Hillenbrand is expected to generate 1.98 times less return on investment than Curtiss Wright. In addition to that, Hillenbrand is 1.41 times more volatile than Curtiss Wright. It trades about 0.03 of its total potential returns per unit of risk. Curtiss Wright is currently generating about 0.08 per unit of volatility. If you would invest  14,505  in Curtiss Wright on January 17, 2024 and sell it today you would earn a total of  10,203  from holding Curtiss Wright or generate 70.34% return on investment over 90 days.

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

Hillenbrand  vs.  Curtiss Wright

Hillenbrand

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hillenbrand are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Hillenbrand may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Curtiss Wright

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Curtiss Wright are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Curtiss Wright may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Hillenbrand and Curtiss Wright

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

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.