Correlation Between CPI Aerostructures and Huntington Ingalls

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Can any of the company-specific risk be diversified away by investing in both CPI Aerostructures and Huntington Ingalls 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 CPI Aerostructures and Huntington Ingalls into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPI Aerostructures and Huntington Ingalls Industries, you can compare the effects of market volatilities on CPI Aerostructures and Huntington Ingalls 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 CPI Aerostructures with a short position of Huntington Ingalls. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPI Aerostructures and Huntington Ingalls.

Diversification Opportunities for CPI Aerostructures and Huntington Ingalls

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between CPI Aerostructures and Huntington is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CPI Aerostructures and Huntington Ingalls Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Ingalls and CPI Aerostructures 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 CPI Aerostructures are associated (or correlated) with Huntington Ingalls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Ingalls has no effect on the direction of CPI Aerostructures i.e., CPI Aerostructures and Huntington Ingalls go up and down completely randomly.

Pair Corralation between CPI Aerostructures and Huntington Ingalls

Given the investment horizon of 90 days CPI Aerostructures is expected to generate 7.81 times more return on investment than Huntington Ingalls. However, CPI Aerostructures is 7.81 times more volatile than Huntington Ingalls Industries. It trades about 0.08 of its potential returns per unit of risk. Huntington Ingalls Industries is currently generating about -0.1 per unit of risk. If you would invest  112.00  in CPI Aerostructures on July 3, 2022 and sell it today you would earn a total of  9.00  from holding CPI Aerostructures or generate 8.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

CPI Aerostructures  vs.  Huntington Ingalls Industries

 Performance (%) 
       Timeline  
CPI Aerostructures 
CPI Aerostructures Performance
0 of 100
Over the last 90 days CPI Aerostructures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CPI Aerostructures is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

CPI Aerostructures Price Channel

Huntington Ingalls 
Huntington Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Ingalls Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Huntington Ingalls is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Huntington Price Channel

CPI Aerostructures and Huntington Ingalls Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CPI Aerostructures and Huntington Ingalls

The main advantage of trading using opposite CPI Aerostructures and Huntington Ingalls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPI Aerostructures position performs unexpectedly, Huntington Ingalls 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 Huntington Ingalls will offset losses from the drop in Huntington Ingalls' long position.
CPI Aerostructures vs. Amazon Inc
The idea behind CPI Aerostructures and Huntington Ingalls Industries 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.
Huntington Ingalls vs. Amazon Inc
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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