Correlation Between Curtiss Wright and Hawaiian Holdings

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

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

Diversification Opportunities for Curtiss Wright and Hawaiian Holdings

-0.84

Correlation Coefficient

Curtiss Wright  Hawaiian Holdings

Pay attention - limited upside

The 3 months correlation between Curtiss and Hawaiian is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss Wright and Hawaiian Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaiian Holdings 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 Hawaiian Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaiian Holdings has no effect on the direction of Curtiss Wright i.e., Curtiss Wright and Hawaiian Holdings go up and down completely randomly.

Pair Corralation between Curtiss Wright and Hawaiian Holdings

Allowing for the 90-day total investment horizon Curtiss Wright is expected to generate 0.69 times more return on investment than Hawaiian Holdings. However, Curtiss Wright is 1.46 times less risky than Hawaiian Holdings. It trades about 0.21 of its potential returns per unit of risk. Hawaiian Holdings is currently generating about -0.07 per unit of risk. If you would invest  21,578  in Curtiss Wright on February 3, 2024 and sell it today you would earn a total of  4,715  from holding Curtiss Wright or generate 21.85% return on investment over 90 days.

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

Curtiss Wright  vs.  Hawaiian Holdings

Curtiss Wright

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Curtiss Wright are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Curtiss Wright showed solid returns over the last few months and may actually be approaching a breakup point.

Hawaiian Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawaiian Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Curtiss Wright and Hawaiian Holdings

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

The idea behind Curtiss Wright and Hawaiian 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 Transaction History module to view history of all your transactions and understand their impact on performance.