Correlation Between Curtiss Wright and IDEX

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

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

Diversification Opportunities for Curtiss Wright and IDEX

0.27

Correlation Coefficient

Curtiss Wright  IDEX

Modest diversification

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

Pair Corralation between Curtiss Wright and IDEX

Allowing for the 90-day total investment horizon Curtiss Wright is expected to generate 0.91 times more return on investment than IDEX. However, Curtiss Wright is 1.1 times less risky than IDEX. It trades about 0.16 of its potential returns per unit of risk. IDEX Corporation is currently generating about -0.32 per unit of risk. If you would invest  25,892  in Curtiss Wright on February 6, 2024 and sell it today you would earn a total of  925.00  from holding Curtiss Wright or generate 3.57% return on investment over 90 days.

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

Curtiss Wright  vs.  IDEX Corp.

Curtiss Wright

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Curtiss Wright are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Curtiss Wright showed solid returns over the last few months and may actually be approaching a breakup point.

IDEX

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IDEX Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, IDEX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Curtiss Wright and IDEX

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

The idea behind Curtiss Wright and IDEX 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.