Correlation Between QinetiQ Group and Huntington Ingalls

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

By analyzing existing cross correlation between QinetiQ Group plc and Huntington Ingalls Industries, you can compare the effects of market volatilities on QinetiQ Group and Huntington Ingalls 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 QinetiQ Group with a short position of Huntington Ingalls. Check out your portfolio center. Please also check ongoing floating volatility patterns of QinetiQ Group and Huntington Ingalls.

Diversification Opportunities for QinetiQ Group and Huntington Ingalls

0.16

Correlation Coefficient

QinetiQ Group  Huntington Ingalls

Average diversification

The 3 months correlation between QinetiQ and Huntington is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding QinetiQ Group plc and Huntington Ingalls Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Ingalls and QinetiQ Group 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 QinetiQ Group plc are associated (or correlated) with Huntington Ingalls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Ingalls has no effect on the direction of QinetiQ Group i.e., QinetiQ Group and Huntington Ingalls go up and down completely randomly.

Pair Corralation between QinetiQ Group and Huntington Ingalls

Assuming the 90 days horizon QinetiQ Group plc is expected to generate 1.1 times more return on investment than Huntington Ingalls. However, QinetiQ Group is 1.1 times more volatile than Huntington Ingalls Industries. It trades about 0.03 of its potential returns per unit of risk. Huntington Ingalls Industries is currently generating about -0.04 per unit of risk. If you would invest  494.00  in QinetiQ Group plc on December 1, 2024 and sell it today you would earn a total of  12.00  from holding QinetiQ Group plc or generate 2.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	73.33%
Values	Daily Returns

QinetiQ Group plc  vs.  Huntington Ingalls Industries

QinetiQ Group plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in QinetiQ Group plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, QinetiQ Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Huntington Ingalls

Risk-Adjusted Performance

Very Weak

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

Pair Trading with QinetiQ Group and Huntington Ingalls

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

The idea behind QinetiQ Group plc and Huntington Ingalls Industries 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.