Correlation Between SPX Corp and CAE

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

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

Diversification Opportunities for SPX Corp and CAE

-0.27

Correlation Coefficient

SPX Corp  CAE

Very good diversification

The 3 months correlation between SPX and CAE is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SPX Corp and CAE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAE Inc and SPX 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 SPX Corp are associated (or correlated) with CAE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAE Inc has no effect on the direction of SPX Corp i.e., SPX Corp and CAE go up and down completely randomly.

Pair Corralation between SPX Corp and CAE

Given the investment horizon of 90 days SPX Corp is expected to generate 1.69 times more return on investment than CAE. However, SPX Corp is 1.69 times more volatile than CAE Inc. It trades about 0.08 of its potential returns per unit of risk. CAE Inc is currently generating about -0.04 per unit of risk. If you would invest  19,205  in SPX Corp on August 26, 2025 and sell it today you would earn a total of  1,992  from holding SPX Corp or generate 10.37% return on investment over 90 days.

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

SPX Corp  vs.  CAE Inc

SPX Corp

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in SPX Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, SPX Corp may actually be approaching a critical reversion point that can send shares even higher in December 2025.

CAE Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days CAE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CAE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPX Corp and CAE

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

The idea behind SPX Corp and CAE Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..