Correlation Between Woodward and VSE

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

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

Diversification Opportunities for Woodward and VSE

0.55

Correlation Coefficient

Woodward  VSE

Very weak diversification

The 3 months correlation between Woodward and VSE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Woodward and VSE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VSE Corporation and Woodward 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 Woodward are associated (or correlated) with VSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VSE Corporation has no effect on the direction of Woodward i.e., Woodward and VSE go up and down completely randomly.

Pair Corralation between Woodward and VSE

Considering the 90-day investment horizon Woodward is expected to generate 0.59 times more return on investment than VSE. However, Woodward is 1.7 times less risky than VSE. It trades about 0.31 of its potential returns per unit of risk. VSE Corporation is currently generating about 0.15 per unit of risk. If you would invest  19,582  in Woodward on May 6, 2025 and sell it today you would earn a total of  6,347  from holding Woodward or generate 32.41% return on investment over 90 days.

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

Woodward  vs.  VSE Corp.

Woodward

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Woodward are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Woodward exhibited solid returns over the last few months and may actually be approaching a breakup point.

VSE Corporation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VSE Corporation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, VSE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Woodward and VSE

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

The idea behind Woodward and VSE Corporation 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.