Correlation Between Huntington Ingalls and Loar Holdings

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

Diversification Opportunities for Huntington Ingalls and Loar Holdings

-0.78

Correlation Coefficient

Huntington Ingalls  Loar Holdings

Pay attention - limited upside

The 3 months correlation between Huntington and Loar is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Ingalls Industries and Loar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loar Holdings 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 Loar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loar Holdings has no effect on the direction of Huntington Ingalls i.e., Huntington Ingalls and Loar Holdings go up and down completely randomly.

Pair Corralation between Huntington Ingalls and Loar Holdings

Considering the 90-day investment horizon Huntington Ingalls Industries is expected to under-perform the Loar Holdings. In addition to that, Huntington Ingalls is 1.22 times more volatile than Loar Holdings. It trades about -0.11 of its total potential returns per unit of risk. Loar Holdings is currently generating about 0.04 per unit of volatility. If you would invest  7,511  in Loar Holdings on September 14, 2024 and sell it today you would earn a total of  403.00  from holding Loar Holdings or generate 5.37% return on investment over 90 days.

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

Huntington Ingalls Industries  vs.  Loar Holdings

Huntington Ingalls

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Loar Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Loar Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Loar Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Huntington Ingalls and Loar Holdings

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

The idea behind Huntington Ingalls Industries and Loar Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.