Correlation Between Raytheon Technologies and Liberty Media

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

Diversification Opportunities for Raytheon Technologies and Liberty Media

-0.76

Correlation Coefficient

Raytheon Technologies  Liberty Media

Pay attention - limited upside

The 3 months correlation between Raytheon and Liberty is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and Liberty Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media Corp 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media Corp has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Liberty Media go up and down completely randomly.

Pair Corralation between Raytheon Technologies and Liberty Media

Assuming the 90 days trading horizon Raytheon Technologies Corp is expected to under-perform the Liberty Media. But the stock apears to be less risky and, when comparing its historical volatility, Raytheon Technologies Corp is 1.76 times less risky than Liberty Media. The stock trades about -0.12 of its potential returns per unit of risk. The Liberty Media Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  8,020  in Liberty Media Corp on October 4, 2024 and sell it today you would earn a total of  355.00  from holding Liberty Media Corp or generate 4.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Raytheon Technologies Corp  vs.  Liberty Media Corp

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

Liberty Media Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Liberty Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Raytheon Technologies and Liberty Media

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

The idea behind Raytheon Technologies Corp and Liberty Media 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 Positions Ratings module to 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.