Correlation Between Intermediate Capital and Raytheon Technologies

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

By analyzing existing cross correlation between Intermediate Capital Group and Raytheon Technologies Corp, you can compare the effects of market volatilities on Intermediate Capital and Raytheon 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 Intermediate Capital with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Capital and Raytheon Technologies.

Diversification Opportunities for Intermediate Capital and Raytheon Technologies

0.78

Correlation Coefficient

Intermediate Capital  Raytheon Technologies

Poor diversification

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

Pair Corralation between Intermediate Capital and Raytheon Technologies

Assuming the 90 days trading horizon Intermediate Capital is expected to generate 1.56 times less return on investment than Raytheon Technologies. In addition to that, Intermediate Capital is 1.44 times more volatile than Raytheon Technologies Corp. It trades about 0.08 of its total potential returns per unit of risk. Raytheon Technologies Corp is currently generating about 0.17 per unit of volatility. If you would invest  11,850  in Raytheon Technologies Corp on December 4, 2024 and sell it today you would earn a total of  1,581  from holding Raytheon Technologies Corp or generate 13.34% return on investment over 90 days.

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

Intermediate Capital Group  vs.  Raytheon Technologies Corp

Intermediate Capital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Intermediate Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Raytheon Technologies

Risk-Adjusted Performance

Good

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

Pair Trading with Intermediate Capital and Raytheon Technologies

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

The idea behind Intermediate Capital Group and Raytheon Technologies Corp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.