Correlation Between Spirit Aerosystems and Textron
Can any of the company-specific risk be diversified away by investing in both Spirit Aerosystems and Textron 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 Spirit Aerosystems and Textron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirit Aerosystems Holdings and Textron, you can compare the effects of market volatilities on Spirit Aerosystems and Textron 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 Spirit Aerosystems with a short position of Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirit Aerosystems and Textron.
Diversification Opportunities for Spirit Aerosystems and Textron
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Spirit and Textron is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Aerosystems Holdings and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron and Spirit Aerosystems 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 Spirit Aerosystems Holdings are associated (or correlated) with Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of Spirit Aerosystems i.e., Spirit Aerosystems and Textron go up and down completely randomly.
Pair Corralation between Spirit Aerosystems and Textron
Considering the 90-day investment horizon Spirit Aerosystems is expected to generate 1.34 times less return on investment than Textron. But when comparing it to its historical volatility, Spirit Aerosystems Holdings is 1.27 times less risky than Textron. It trades about 0.28 of its potential returns per unit of risk. Textron is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 6,597 in Textron on April 14, 2025 and sell it today you would earn a total of 1,905 from holding Textron or generate 28.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirit Aerosystems Holdings vs. Textron
Performance |
| Timeline |
| Spirit Aerosystems |
| Textron |
Spirit Aerosystems and Textron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirit Aerosystems and Textron
The main advantage of trading using opposite Spirit Aerosystems and Textron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Aerosystems position performs unexpectedly, Textron 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 Textron will offset losses from the drop in Textron's long position.| Spirit Aerosystems vs. Textron | Spirit Aerosystems vs. Triumph Group | Spirit Aerosystems vs. Embraer SA ADR | Spirit Aerosystems vs. The Boeing |
| Textron vs. Hexcel | Textron vs. Huntington Ingalls Industries | Textron vs. Curtiss Wright | Textron vs. Mercury Systems |
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 the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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