Correlation Between HEICO and Astronics

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

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

Diversification Opportunities for HEICO and Astronics

0.82

Correlation Coefficient

HEICO  Astronics

Very poor diversification

The 3 months correlation between HEICO and Astronics is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding HEICO and Astronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics and HEICO 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 HEICO are associated (or correlated) with Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics has no effect on the direction of HEICO i.e., HEICO and Astronics go up and down completely randomly.

Pair Corralation between HEICO and Astronics

Assuming the 90 days horizon HEICO is expected to generate 3.33 times less return on investment than Astronics. But when comparing it to its historical volatility, HEICO is 1.57 times less risky than Astronics. It trades about 0.07 of its potential returns per unit of risk. Astronics is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,607  in Astronics on January 14, 2025 and sell it today you would earn a total of  641.00  from holding Astronics or generate 39.89% return on investment over 90 days.

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

HEICO  vs.  Astronics

HEICO

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HEICO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, HEICO may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Astronics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Astronics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Astronics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HEICO and Astronics

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

The idea behind HEICO and Astronics 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.