Correlation Between Huntington Ingalls and Intuitive Machines

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

Diversification Opportunities for Huntington Ingalls and Intuitive Machines

0.07

Correlation Coefficient

Huntington Ingalls  Intuitive Machines

Significant diversification

The 3 months correlation between Huntington and Intuitive is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Ingalls Industries and Intuitive Machines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Machines 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 Intuitive Machines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Machines has no effect on the direction of Huntington Ingalls i.e., Huntington Ingalls and Intuitive Machines go up and down completely randomly.

Pair Corralation between Huntington Ingalls and Intuitive Machines

Considering the 90-day investment horizon Huntington Ingalls Industries is expected to under-perform the Intuitive Machines. But the stock apears to be less risky and, when comparing its historical volatility, Huntington Ingalls Industries is 3.75 times less risky than Intuitive Machines. The stock trades about -0.05 of its potential returns per unit of risk. The Intuitive Machines is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  670.00  in Intuitive Machines on November 28, 2024 and sell it today you would lose (114.00) from holding Intuitive Machines or give up 17.01% of portfolio value over 90 days.

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

Huntington Ingalls Industries  vs.  Intuitive Machines

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 latest uncertain performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Intuitive Machines

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Machines are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Intuitive Machines showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huntington Ingalls and Intuitive Machines

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

The idea behind Huntington Ingalls Industries and Intuitive Machines 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.