Correlation Between Raytheon Technologies and Iron Mountain

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Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and Iron Mountain 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 Iron Mountain 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 Iron Mountain, you can compare the effects of market volatilities on Raytheon Technologies and Iron Mountain 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 Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Iron Mountain.

Diversification Opportunities for Raytheon Technologies and Iron Mountain

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Raytheon and Iron is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and Iron Mountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain 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 Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Iron Mountain go up and down completely randomly.

Pair Corralation between Raytheon Technologies and Iron Mountain

Assuming the 90 days trading horizon Raytheon Technologies Corp is expected to generate 0.75 times more return on investment than Iron Mountain. However, Raytheon Technologies Corp is 1.34 times less risky than Iron Mountain. It trades about 0.09 of its potential returns per unit of risk. Iron Mountain is currently generating about 0.06 per unit of risk. If you would invest  9,961  in Raytheon Technologies Corp on October 4, 2024 and sell it today you would earn a total of  1,632  from holding Raytheon Technologies Corp or generate 16.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.43%
ValuesDaily Returns

Raytheon Technologies Corp  vs.  Iron Mountain

 Performance 
       Timeline  
Raytheon Technologies 

Risk-Adjusted Performance

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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 newest stock price uproar, may contribute to short-horizon losses for the private investors.
Iron Mountain 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Iron Mountain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Raytheon Technologies and Iron Mountain Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Raytheon Technologies and Iron Mountain

The main advantage of trading using opposite Raytheon Technologies and Iron Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Iron Mountain 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 Iron Mountain will offset losses from the drop in Iron Mountain's long position.
The idea behind Raytheon Technologies Corp and Iron Mountain 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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