Correlation Between Qinetiq Group and L3Harris Technologies

Can any of the company-specific risk be diversified away by investing in both Qinetiq Group and L3Harris 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 Qinetiq Group and L3Harris Technologies 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 L3Harris Technologies, you can compare the effects of market volatilities on Qinetiq Group and L3Harris 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 Qinetiq Group with a short position of L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qinetiq Group and L3Harris Technologies.

Diversification Opportunities for Qinetiq Group and L3Harris Technologies

-0.21

Correlation Coefficient

Qinetiq Group  L3Harris Technologies

Very good diversification

The 3 months correlation between Qinetiq and L3Harris is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Qinetiq Group PLC and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies 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 L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of Qinetiq Group i.e., Qinetiq Group and L3Harris Technologies go up and down completely randomly.

Pair Corralation between Qinetiq Group and L3Harris Technologies

Assuming the 90 days horizon Qinetiq Group PLC is expected to under-perform the L3Harris Technologies. In addition to that, Qinetiq Group is 1.81 times more volatile than L3Harris Technologies. It trades about -0.11 of its total potential returns per unit of risk. L3Harris Technologies is currently generating about -0.06 per unit of volatility. If you would invest  24,591  in L3Harris Technologies on September 5, 2024 and sell it today you would lose (605.00) from holding L3Harris Technologies or give up 2.46% of portfolio value over 90 days.

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

Qinetiq Group PLC  vs.  L3Harris Technologies

Qinetiq Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qinetiq Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

L3Harris Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in L3Harris Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, L3Harris Technologies is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Qinetiq Group and L3Harris Technologies

The main advantage of trading using opposite Qinetiq Group and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qinetiq Group position performs unexpectedly, L3Harris 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.

The idea behind Qinetiq Group PLC and L3Harris Technologies 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..