Correlation Between BLOCK INC and RAYTHEON

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

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

Diversification Opportunities for BLOCK INC and RAYTHEON

0.33

Correlation Coefficient

BLOCK INC  RAYTHEON

Weak diversification

The 3 months correlation between BLOCK and RAYTHEON is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BLOCK INC and RAYTHEON TECHNOLOGIES PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAYTHEON TECHNOLOGIES and BLOCK INC 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 BLOCK INC are associated (or correlated) with RAYTHEON. 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 BLOCK INC i.e., BLOCK INC and RAYTHEON go up and down completely randomly.

Pair Corralation between BLOCK INC and RAYTHEON

Allowing for the 90-day total investment horizon BLOCK INC is expected to under-perform the RAYTHEON. In addition to that, BLOCK INC is 5.54 times more volatile than RAYTHEON TECHNOLOGIES PORATION. It trades about -0.1 of its total potential returns per unit of risk. RAYTHEON TECHNOLOGIES PORATION is currently generating about -0.19 per unit of volatility. If you would invest  8,682  in RAYTHEON TECHNOLOGIES PORATION on October 26, 2024 and sell it today you would lose (172.00) from holding RAYTHEON TECHNOLOGIES PORATION or give up 1.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.0%
Values	Daily Returns

BLOCK INC  vs.  RAYTHEON TECHNOLOGIES PORATION

BLOCK INC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BLOCK INC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, BLOCK INC reported solid returns over the last few months and may actually be approaching a breakup point.

RAYTHEON TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RAYTHEON TECHNOLOGIES PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RAYTHEON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BLOCK INC and RAYTHEON

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

The idea behind BLOCK INC and RAYTHEON TECHNOLOGIES PORATION 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.