Correlation Between Huntington Ingalls and METISA Metalrgica

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

By analyzing existing cross correlation between Huntington Ingalls Industries, and METISA Metalrgica Timboense, you can compare the effects of market volatilities on Huntington Ingalls and METISA Metalrgica 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 Huntington Ingalls with a short position of METISA Metalrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntington Ingalls and METISA Metalrgica.

Diversification Opportunities for Huntington Ingalls and METISA Metalrgica

-0.57

Correlation Coefficient

Huntington Ingalls  METISA Metalrgica

Excellent diversification

The 3 months correlation between Huntington and METISA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Ingalls Industries, and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica and Huntington Ingalls 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 Huntington Ingalls Industries, are associated (or correlated) with METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of Huntington Ingalls i.e., Huntington Ingalls and METISA Metalrgica go up and down completely randomly.

Pair Corralation between Huntington Ingalls and METISA Metalrgica

Assuming the 90 days trading horizon Huntington Ingalls is expected to generate 12.84 times less return on investment than METISA Metalrgica. In addition to that, Huntington Ingalls is 2.39 times more volatile than METISA Metalrgica Timboense. It trades about 0.01 of its total potential returns per unit of risk. METISA Metalrgica Timboense is currently generating about 0.17 per unit of volatility. If you would invest  3,643  in METISA Metalrgica Timboense on December 25, 2024 and sell it today you would earn a total of  531.00  from holding METISA Metalrgica Timboense or generate 14.58% return on investment over 90 days.

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

Huntington Ingalls Industries,  vs.  METISA Metalrgica Timboense

Huntington Ingalls

Risk-Adjusted Performance

Very Weak

Over the last 90 days Huntington Ingalls Industries, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Huntington Ingalls is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

METISA Metalrgica

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huntington Ingalls and METISA Metalrgica

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

The idea behind Huntington Ingalls Industries, and METISA Metalrgica Timboense 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.