Correlation Between Astronics and BP PLC

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

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

Diversification Opportunities for Astronics and BP PLC

0.78

Correlation Coefficient

Astronics  BP PLC

Poor diversification

The 3 months correlation between Astronics and BP PLC is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Astronics and BP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC ADR and Astronics 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 Astronics are associated (or correlated) with BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC ADR has no effect on the direction of Astronics i.e., Astronics and BP PLC go up and down completely randomly.

Pair Corralation between Astronics and BP PLC

Given the investment horizon of 90 days Astronics is expected to generate 2.37 times more return on investment than BP PLC. However, Astronics is 2.37 times more volatile than BP PLC ADR. It trades about 0.18 of its potential returns per unit of risk. BP PLC ADR is currently generating about 0.11 per unit of risk. If you would invest  2,384  in Astronics on May 5, 2025 and sell it today you would earn a total of  1,042  from holding Astronics or generate 43.71% return on investment over 90 days.

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

Astronics  vs.  BP PLC ADR

Astronics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Astronics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Astronics displayed solid returns over the last few months and may actually be approaching a breakup point.

BP PLC ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BP PLC ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, BP PLC may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Astronics and BP PLC

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

The idea behind Astronics and BP PLC ADR 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.