Correlation Between Nauticus Robotics and BAE Systems

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

By analyzing existing cross correlation between Nauticus Robotics and BAE Systems PLC, you can compare the effects of market volatilities on Nauticus Robotics and BAE Systems 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 Nauticus Robotics with a short position of BAE Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nauticus Robotics and BAE Systems.

Diversification Opportunities for Nauticus Robotics and BAE Systems

-0.19

Correlation Coefficient

Nauticus Robotics  BAE Systems

Good diversification

The 3 months correlation between Nauticus and BAE is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nauticus Robotics and BAE Systems PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAE Systems PLC and Nauticus Robotics 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 Nauticus Robotics are associated (or correlated) with BAE Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAE Systems PLC has no effect on the direction of Nauticus Robotics i.e., Nauticus Robotics and BAE Systems go up and down completely randomly.

Pair Corralation between Nauticus Robotics and BAE Systems

Given the investment horizon of 90 days Nauticus Robotics is expected to generate 29.45 times more return on investment than BAE Systems. However, Nauticus Robotics is 29.45 times more volatile than BAE Systems PLC. It trades about 0.3 of its potential returns per unit of risk. BAE Systems PLC is currently generating about -0.28 per unit of risk. If you would invest  108.00  in Nauticus Robotics on October 8, 2024 and sell it today you would earn a total of  272.00  from holding Nauticus Robotics or generate 251.85% return on investment over 90 days.

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

Nauticus Robotics  vs.  BAE Systems PLC

Nauticus Robotics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nauticus Robotics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Nauticus Robotics unveiled solid returns over the last few months and may actually be approaching a breakup point.

BAE Systems PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAE Systems PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nauticus Robotics and BAE Systems

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

The idea behind Nauticus Robotics and BAE Systems PLC 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.