Correlation Between Raytheon Technologies and Celebrus Technologies

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

Diversification Opportunities for Raytheon Technologies and Celebrus Technologies

0.02

Correlation Coefficient

Raytheon Technologies  Celebrus Technologies

Significant diversification

The 3 months correlation between Raytheon and Celebrus is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and Celebrus Technologies plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celebrus Technologies plc 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 Celebrus Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celebrus Technologies plc has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Celebrus Technologies go up and down completely randomly.

Pair Corralation between Raytheon Technologies and Celebrus Technologies

Assuming the 90 days trading horizon Raytheon Technologies Corp is expected to under-perform the Celebrus Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Raytheon Technologies Corp is 2.27 times less risky than Celebrus Technologies. The stock trades about -0.08 of its potential returns per unit of risk. The Celebrus Technologies plc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  28,409  in Celebrus Technologies plc on October 4, 2024 and sell it today you would lose (1,659) from holding Celebrus Technologies plc or give up 5.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Raytheon Technologies Corp  vs.  Celebrus Technologies plc

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.

Celebrus Technologies plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Raytheon Technologies and Celebrus Technologies

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

The idea behind Raytheon Technologies Corp and Celebrus Technologies plc 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.