Correlation Between Rockwell Collins and Wesco Aircraft

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

Diversification Opportunities for Rockwell Collins and Wesco Aircraft

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Rockwell and Wesco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rockwell Collins and Wesco Aircraft Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesco Aircraft Holdings and Rockwell Collins 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 Rockwell Collins are associated (or correlated) with Wesco Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesco Aircraft Holdings has no effect on the direction of Rockwell Collins i.e., Rockwell Collins and Wesco Aircraft go up and down completely randomly.

Pair Corralation between Rockwell Collins and Wesco Aircraft

If you would invest (100.00) in Wesco Aircraft Holdings on December 30, 2023 and sell it today you would earn a total of  100.00  from holding Wesco Aircraft Holdings or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Rockwell Collins  vs.  Wesco Aircraft Holdings

 Performance 
       Timeline  
Rockwell Collins 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Rockwell Collins has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Rockwell Collins is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Wesco Aircraft Holdings 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Wesco Aircraft Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Wesco Aircraft is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Rockwell Collins and Wesco Aircraft Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rockwell Collins and Wesco Aircraft

The main advantage of trading using opposite Rockwell Collins and Wesco Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockwell Collins position performs unexpectedly, Wesco Aircraft 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 Wesco Aircraft will offset losses from the drop in Wesco Aircraft's long position.
The idea behind Rockwell Collins and Wesco Aircraft Holdings 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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