Correlation Between Raytheon Technologies and Cars
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and Cars 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 Raytheon Technologies and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies Corp and Cars Inc, you can compare the effects of market volatilities on Raytheon Technologies and Cars 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 Raytheon Technologies with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Cars.
Diversification Opportunities for Raytheon Technologies and Cars
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Raytheon and Cars is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and Raytheon Technologies 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 Raytheon Technologies Corp are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Cars go up and down completely randomly.
Pair Corralation between Raytheon Technologies and Cars
Assuming the 90 days trading horizon Raytheon Technologies Corp is expected to generate 0.35 times more return on investment than Cars. However, Raytheon Technologies Corp is 2.87 times less risky than Cars. It trades about -0.17 of its potential returns per unit of risk. Cars Inc is currently generating about -0.36 per unit of risk. If you would invest 11,964 in Raytheon Technologies Corp on September 26, 2024 and sell it today you would lose (375.00) from holding Raytheon Technologies Corp or give up 3.13% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 72.73% |
Values | Daily Returns |
Raytheon Technologies Corp vs. Cars Inc
Performance |
Timeline |
Raytheon Technologies |
Cars Inc |
Raytheon Technologies and Cars Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Raytheon Technologies and Cars
The main advantage of trading using opposite Raytheon Technologies and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.Raytheon Technologies vs. Uniper SE | Raytheon Technologies vs. Mulberry Group PLC | Raytheon Technologies vs. London Security Plc | Raytheon Technologies vs. Triad Group PLC |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume |