Correlation Between Curtiss Wright and Crane
Can any of the company-specific risk be diversified away by investing in both Curtiss Wright and Crane 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 Curtiss Wright and Crane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Curtiss Wright and Crane Company, you can compare the effects of market volatilities on Curtiss Wright and Crane 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 Curtiss Wright with a short position of Crane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Curtiss Wright and Crane.
Diversification Opportunities for Curtiss Wright and Crane
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Curtiss and Crane is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss Wright and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company and Curtiss Wright 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 Curtiss Wright are associated (or correlated) with Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Curtiss Wright i.e., Curtiss Wright and Crane go up and down completely randomly.
Pair Corralation between Curtiss Wright and Crane
Allowing for the 90-day total investment horizon Curtiss Wright is expected to generate 29.41 times less return on investment than Crane. But when comparing it to its historical volatility, Curtiss Wright is 2.22 times less risky than Crane. It trades about 0.01 of its potential returns per unit of risk. Crane Company is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 13,489 in Crane Company on January 27, 2024 and sell it today you would earn a total of 946.00 from holding Crane Company or generate 7.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Curtiss Wright vs. Crane Company
Performance |
| Timeline |
| Curtiss Wright |
| Crane Company |
Curtiss Wright and Crane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Curtiss Wright and Crane
The main advantage of trading using opposite Curtiss Wright and Crane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Curtiss Wright position performs unexpectedly, Crane 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 Crane will offset losses from the drop in Crane's long position.| Curtiss Wright vs. Kaman | Curtiss Wright vs. Innovative Solutions and | Curtiss Wright vs. National Presto Industries | Curtiss Wright vs. Hexcel |
Check out your portfolio center.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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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