Correlation Between Northrop Grumman and Draganfly

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

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

Diversification Opportunities for Northrop Grumman and Draganfly

-0.4

Correlation Coefficient

Northrop Grumman  Draganfly

Very good diversification

The 3 months correlation between Northrop and Draganfly is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Northrop Grumman and Draganfly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Draganfly and Northrop Grumman 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 Northrop Grumman are associated (or correlated) with Draganfly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Draganfly has no effect on the direction of Northrop Grumman i.e., Northrop Grumman and Draganfly go up and down completely randomly.

Pair Corralation between Northrop Grumman and Draganfly

Considering the 90-day investment horizon Northrop Grumman is expected to under-perform the Draganfly. But the stock apears to be less risky and, when comparing its historical volatility, Northrop Grumman is 8.58 times less risky than Draganfly. The stock trades about -0.11 of its potential returns per unit of risk. The Draganfly is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  239.00  in Draganfly on September 15, 2024 and sell it today you would earn a total of  197.00  from holding Draganfly or generate 82.43% return on investment over 90 days.

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

Northrop Grumman  vs.  Draganfly

Northrop Grumman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northrop Grumman has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Draganfly

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Northrop Grumman and Draganfly

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

The idea behind Northrop Grumman and Draganfly 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.