Correlation Between Astronics and CAE

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

Diversification Opportunities for Astronics and CAE

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Astronics and CAE is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Astronics Cp and CAE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAE Inc and Astronics 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 Astronics Cp 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 Astronics i.e., Astronics and CAE go up and down completely randomly.

Pair Corralation between Astronics and CAE

Given the investment horizon of 90 days Astronics is expected to generate 1.21 times less return on investment than CAE. In addition to that, Astronics is 1.5 times more volatile than CAE Inc. It trades about 0.02 of its total potential returns per unit of risk. CAE Inc is currently generating about 0.04 per unit of volatility. If you would invest  1,529  in CAE Inc on February 21, 2022 and sell it today you would earn a total of  784.00  from holding CAE Inc or generate 51.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Astronics Cp  vs.  CAE Inc

 Performance (%) 
      Timeline 
Astronics Cp 
Astronics Performance
0 of 100
Over the last 90 days Astronics Cp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Astronics Price Channel

CAE Inc 
CAE Performance
0 of 100
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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

CAE Price Channel

Astronics and CAE Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Astronics and CAE

The main advantage of trading using opposite Astronics and CAE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astronics 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 Astronics Cp 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.
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 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.

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