Correlation Between Redwire Corp and Momentus

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

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

Diversification Opportunities for Redwire Corp and Momentus

-0.07

Correlation Coefficient

Redwire Corp  Momentus

Good diversification

The 3 months correlation between Redwire and Momentus is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Redwire Corp and Momentus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Momentus and Redwire Corp 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 Redwire Corp are associated (or correlated) with Momentus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Momentus has no effect on the direction of Redwire Corp i.e., Redwire Corp and Momentus go up and down completely randomly.

Pair Corralation between Redwire Corp and Momentus

Considering the 90-day investment horizon Redwire Corp is expected to generate 1.5 times less return on investment than Momentus. But when comparing it to its historical volatility, Redwire Corp is 3.64 times less risky than Momentus. It trades about 0.15 of its potential returns per unit of risk. Momentus is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  53.00  in Momentus on August 24, 2024 and sell it today you would earn a total of  5.00  from holding Momentus or generate 9.43% return on investment over 90 days.

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

Redwire Corp  vs.  Momentus

Redwire Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Redwire Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Redwire Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Momentus

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Momentus are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Momentus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Redwire Corp and Momentus

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

The idea behind Redwire Corp and Momentus 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.