Correlation Between RTX AS and SP Group

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

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

Diversification Opportunities for RTX AS and SP Group

0.34

Correlation Coefficient

RTX AS  SP Group

Weak diversification

The 3 months correlation between RTX and SPG is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding RTX AS and SP Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Group AS and RTX AS 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 RTX AS are associated (or correlated) with SP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Group AS has no effect on the direction of RTX AS i.e., RTX AS and SP Group go up and down completely randomly.

Pair Corralation between RTX AS and SP Group

Assuming the 90 days trading horizon RTX AS is expected to generate 1.35 times more return on investment than SP Group. However, RTX AS is 1.35 times more volatile than SP Group AS. It trades about 0.17 of its potential returns per unit of risk. SP Group AS is currently generating about 0.01 per unit of risk. If you would invest  5,680  in RTX AS on December 25, 2024 and sell it today you would earn a total of  1,600  from holding RTX AS or generate 28.17% return on investment over 90 days.

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

RTX AS  vs.  SP Group AS

RTX AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RTX AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, RTX AS displayed solid returns over the last few months and may actually be approaching a breakup point.

SP Group AS

Risk-Adjusted Performance

Weak

Over the last 90 days SP Group AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, SP Group is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RTX AS and SP Group

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

The idea behind RTX AS and SP Group AS 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..