Correlation Between QCR Holdings and Raytheon Technologies

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

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

Diversification Opportunities for QCR Holdings and Raytheon Technologies

-0.77

Correlation Coefficient

QCR Holdings  Raytheon Technologies

Pay attention - limited upside

The 3 months correlation between QCR and Raytheon is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding QCR Holdings and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and QCR Holdings 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 QCR Holdings 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 QCR Holdings i.e., QCR Holdings and Raytheon Technologies go up and down completely randomly.

Pair Corralation between QCR Holdings and Raytheon Technologies

Given the investment horizon of 90 days QCR Holdings is expected to under-perform the Raytheon Technologies. But the stock apears to be less risky and, when comparing its historical volatility, QCR Holdings is 1.17 times less risky than Raytheon Technologies. The stock trades about -0.12 of its potential returns per unit of risk. The Raytheon Technologies Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  11,612  in Raytheon Technologies Corp on December 27, 2024 and sell it today you would earn a total of  1,728  from holding Raytheon Technologies Corp or generate 14.88% return on investment over 90 days.

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

QCR Holdings  vs.  Raytheon Technologies Corp

QCR Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days QCR Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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 fairly unsteady basic indicators, Raytheon Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with QCR Holdings and Raytheon Technologies

The main advantage of trading using opposite QCR Holdings and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QCR Holdings 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 QCR Holdings 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.