Correlation Between Kaman and Woodward

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

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

Diversification Opportunities for Kaman and Woodward

0.68

Correlation Coefficient

Kaman  Woodward

Poor diversification

The 3 months correlation between Kaman and Woodward is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kaman and Woodward in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodward and Kaman 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 Kaman are associated (or correlated) with Woodward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodward has no effect on the direction of Kaman i.e., Kaman and Woodward go up and down completely randomly.

Pair Corralation between Kaman and Woodward

If you would invest  18,286  in Woodward on September 2, 2024 and sell it today you would lose (254.00) from holding Woodward or give up 1.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.79%
Values	Daily Returns

Kaman  vs.  Woodward

Kaman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaman has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Kaman is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Woodward

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Woodward are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Woodward exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaman and Woodward

The main advantage of trading using opposite Kaman and Woodward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaman position performs unexpectedly, Woodward 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 Woodward will offset losses from the drop in Woodward's long position.

The idea behind Kaman and Woodward 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.