Correlation Between GE Aerospace and Curtiss Wright

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

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

Diversification Opportunities for GE Aerospace and Curtiss Wright

-0.3

Correlation Coefficient

GE Aerospace  Curtiss Wright

Very good diversification

The 3 months correlation between GE Aerospace and Curtiss is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Curtiss Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Wright and GE Aerospace 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 GE Aerospace 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 GE Aerospace i.e., GE Aerospace and Curtiss Wright go up and down completely randomly.

Pair Corralation between GE Aerospace and Curtiss Wright

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.22 times more return on investment than Curtiss Wright. However, GE Aerospace is 1.22 times more volatile than Curtiss Wright. It trades about 0.14 of its potential returns per unit of risk. Curtiss Wright is currently generating about 0.12 per unit of risk. If you would invest  5,252  in GE Aerospace on September 23, 2024 and sell it today you would earn a total of  11,585  from holding GE Aerospace or generate 220.58% return on investment over 90 days.

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

GE Aerospace  vs.  Curtiss Wright

GE Aerospace

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GE Aerospace has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Curtiss Wright

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Curtiss Wright are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Curtiss Wright may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GE Aerospace and Curtiss Wright

The main advantage of trading using opposite GE Aerospace and Curtiss Wright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace 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 GE Aerospace 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..