Correlation Between Huntington Ingalls and Redwire Corp

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

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

Diversification Opportunities for Huntington Ingalls and Redwire Corp

-0.63

Correlation Coefficient

Huntington Ingalls  Redwire Corp

Excellent diversification

The 3 months correlation between Huntington and Redwire is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Ingalls Industries and Redwire Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwire Corp and Huntington Ingalls 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 Huntington Ingalls Industries are associated (or correlated) with Redwire Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwire Corp has no effect on the direction of Huntington Ingalls i.e., Huntington Ingalls and Redwire Corp go up and down completely randomly.

Pair Corralation between Huntington Ingalls and Redwire Corp

Considering the 90-day investment horizon Huntington Ingalls is expected to generate 2.44 times less return on investment than Redwire Corp. But when comparing it to its historical volatility, Huntington Ingalls Industries is 3.53 times less risky than Redwire Corp. It trades about 0.47 of its potential returns per unit of risk. Redwire Corp is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  751.00  in Redwire Corp on February 3, 2025 and sell it today you would earn a total of  467.00  from holding Redwire Corp or generate 62.18% return on investment over 90 days.

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

Huntington Ingalls Industries  vs.  Redwire Corp

Huntington Ingalls

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Ingalls Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Huntington Ingalls demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Redwire Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Redwire Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in June 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Huntington Ingalls and Redwire Corp

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

The idea behind Huntington Ingalls Industries and Redwire Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.