Correlation Between Leonardo DRS, and Triumph

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

By analyzing existing cross correlation between Leonardo DRS, Common and Triumph Group, you can compare the effects of market volatilities on Leonardo DRS, and Triumph 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 Leonardo DRS, with a short position of Triumph. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leonardo DRS, and Triumph.

Diversification Opportunities for Leonardo DRS, and Triumph

-0.45

Correlation Coefficient

Leonardo DRS,  Triumph

Very good diversification

The 3 months correlation between Leonardo and Triumph is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Leonardo DRS, Common and Triumph Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triumph Group and Leonardo DRS, 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 Leonardo DRS, Common are associated (or correlated) with Triumph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triumph Group has no effect on the direction of Leonardo DRS, i.e., Leonardo DRS, and Triumph go up and down completely randomly.

Pair Corralation between Leonardo DRS, and Triumph

Considering the 90-day investment horizon Leonardo DRS, is expected to generate 9.5 times less return on investment than Triumph. But when comparing it to its historical volatility, Leonardo DRS, Common is 1.56 times less risky than Triumph. It trades about 0.02 of its potential returns per unit of risk. Triumph Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,865  in Triumph Group on December 29, 2024 and sell it today you would earn a total of  678.00  from holding Triumph Group or generate 36.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Leonardo DRS, Common  vs.  Triumph Group

Leonardo DRS, Common

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Leonardo DRS, Common are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Leonardo DRS, is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Triumph Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Triumph Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Triumph demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Leonardo DRS, and Triumph

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

The idea behind Leonardo DRS, Common and Triumph Group 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.