Correlation Between IShares Core and RAYTHEON

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

By analyzing existing cross correlation between iShares Core SP and RAYTHEON TECHNOLOGIES PORATION, you can compare the effects of market volatilities on IShares Core and RAYTHEON 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 IShares Core with a short position of RAYTHEON. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and RAYTHEON.

Diversification Opportunities for IShares Core and RAYTHEON

-0.39

Correlation Coefficient

IShares Core  RAYTHEON

Very good diversification

The 3 months correlation between IShares and RAYTHEON is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and RAYTHEON TECHNOLOGIES PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAYTHEON TECHNOLOGIES and IShares Core 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 iShares Core SP are associated (or correlated) with RAYTHEON. 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 IShares Core i.e., IShares Core and RAYTHEON go up and down completely randomly.

Pair Corralation between IShares Core and RAYTHEON

Considering the 90-day investment horizon iShares Core SP is expected to under-perform the RAYTHEON. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core SP is 2.39 times less risky than RAYTHEON. The etf trades about -0.04 of its potential returns per unit of risk. The RAYTHEON TECHNOLOGIES PORATION is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8,495  in RAYTHEON TECHNOLOGIES PORATION on October 11, 2024 and sell it today you would earn a total of  272.00  from holding RAYTHEON TECHNOLOGIES PORATION or generate 3.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.93%
Values	Daily Returns

iShares Core SP  vs.  RAYTHEON TECHNOLOGIES PORATION

iShares Core SP

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

RAYTHEON TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares Core and RAYTHEON

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

The idea behind iShares Core SP and RAYTHEON TECHNOLOGIES PORATION 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.