Correlation Between Redwire Corp and Nauticus Robotics

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

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

Diversification Opportunities for Redwire Corp and Nauticus Robotics

-0.41

Correlation Coefficient

Redwire Corp  Nauticus Robotics

Very good diversification

The 3 months correlation between Redwire and Nauticus is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Redwire Corp and Nauticus Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nauticus Robotics and Redwire 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 Redwire Corp are associated (or correlated) with Nauticus Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nauticus Robotics has no effect on the direction of Redwire Corp i.e., Redwire Corp and Nauticus Robotics go up and down completely randomly.

Pair Corralation between Redwire Corp and Nauticus Robotics

Considering the 90-day investment horizon Redwire Corp is expected to generate 0.49 times more return on investment than Nauticus Robotics. However, Redwire Corp is 2.06 times less risky than Nauticus Robotics. It trades about 0.08 of its potential returns per unit of risk. Nauticus Robotics is currently generating about -0.09 per unit of risk. If you would invest  303.00  in Redwire Corp on August 2, 2024 and sell it today you would earn a total of  487.00  from holding Redwire Corp or generate 160.73% return on investment over 90 days.

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

Redwire Corp  vs.  Nauticus Robotics

Redwire Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Redwire Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Redwire Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Nauticus Robotics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nauticus Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Redwire Corp and Nauticus Robotics

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

The idea behind Redwire Corp and Nauticus Robotics 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 Stocks Directory module to find actively traded stocks across global markets.