Correlation Between UNIQA Insurance and Raytheon Technologies

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

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

Diversification Opportunities for UNIQA Insurance and Raytheon Technologies

-0.49

Correlation Coefficient

UNIQA Insurance  Raytheon Technologies

Very good diversification

The 3 months correlation between UNIQA and Raytheon is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding UNIQA Insurance Group and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and UNIQA Insurance 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 UNIQA Insurance Group are associated (or correlated) with Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of UNIQA Insurance i.e., UNIQA Insurance and Raytheon Technologies go up and down completely randomly.

Pair Corralation between UNIQA Insurance and Raytheon Technologies

Assuming the 90 days trading horizon UNIQA Insurance is expected to generate 2.58 times less return on investment than Raytheon Technologies. But when comparing it to its historical volatility, UNIQA Insurance Group is 1.54 times less risky than Raytheon Technologies. It trades about 0.07 of its potential returns per unit of risk. Raytheon Technologies Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8,328  in Raytheon Technologies Corp on October 10, 2024 and sell it today you would earn a total of  3,156  from holding Raytheon Technologies Corp or generate 37.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

UNIQA Insurance Group  vs.  Raytheon Technologies Corp

UNIQA Insurance Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNIQA Insurance Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, UNIQA Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Raytheon Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raytheon Technologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Raytheon Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with UNIQA Insurance and Raytheon Technologies

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

The idea behind UNIQA Insurance Group and Raytheon Technologies Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.