Correlation Between Textron and Eve Holding

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

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

Diversification Opportunities for Textron and Eve Holding

-0.25

Correlation Coefficient

Textron  Eve Holding

Very good diversification

The 3 months correlation between Textron and Eve is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Textron and Eve Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eve Holding and Textron 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 Textron are associated (or correlated) with Eve Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eve Holding has no effect on the direction of Textron i.e., Textron and Eve Holding go up and down completely randomly.

Pair Corralation between Textron and Eve Holding

Considering the 90-day investment horizon Textron is expected to under-perform the Eve Holding. But the stock apears to be less risky and, when comparing its historical volatility, Textron is 2.45 times less risky than Eve Holding. The stock trades about -0.05 of its potential returns per unit of risk. The Eve Holding is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  281.00  in Eve Holding on September 12, 2024 and sell it today you would earn a total of  171.00  from holding Eve Holding or generate 60.85% return on investment over 90 days.

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

Textron  vs.  Eve Holding

Textron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Textron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Textron is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Eve Holding

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eve Holding are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Eve Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Textron and Eve Holding

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

The idea behind Textron and Eve Holding 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.