Correlation Between Taurus Armas and Raytheon Technologies

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

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

Diversification Opportunities for Taurus Armas and Raytheon Technologies

-0.16

Correlation Coefficient

Taurus Armas  Raytheon Technologies

Good diversification

The 3 months correlation between Taurus and Raytheon is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Taurus Armas SA and Raytheon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Taurus Armas 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 Taurus Armas SA 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 Taurus Armas i.e., Taurus Armas and Raytheon Technologies go up and down completely randomly.

Pair Corralation between Taurus Armas and Raytheon Technologies

Assuming the 90 days trading horizon Taurus Armas SA is expected to under-perform the Raytheon Technologies. In addition to that, Taurus Armas is 2.36 times more volatile than Raytheon Technologies. It trades about -0.2 of its total potential returns per unit of risk. Raytheon Technologies is currently generating about -0.11 per unit of volatility. If you would invest  12,004  in Raytheon Technologies on October 15, 2024 and sell it today you would lose (230.00) from holding Raytheon Technologies or give up 1.92% of portfolio value over 90 days.

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

Taurus Armas SA  vs.  Raytheon Technologies

Taurus Armas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taurus Armas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Raytheon Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Taurus Armas and Raytheon Technologies

The main advantage of trading using opposite Taurus Armas and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taurus Armas 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 Taurus Armas SA and Raytheon 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.