Correlation Between Transdigm Group and Kongsberg Gruppen
Can any of the company-specific risk be diversified away by investing in both Transdigm Group and Kongsberg Gruppen 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 Transdigm Group and Kongsberg Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transdigm Group Incorporated and Kongsberg Gruppen ASA, you can compare the effects of market volatilities on Transdigm Group and Kongsberg Gruppen 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 Transdigm Group with a short position of Kongsberg Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transdigm Group and Kongsberg Gruppen.
Diversification Opportunities for Transdigm Group and Kongsberg Gruppen
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transdigm and Kongsberg is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Transdigm Group Incorporated and Kongsberg Gruppen ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kongsberg Gruppen ASA and Transdigm 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 Transdigm Group Incorporated are associated (or correlated) with Kongsberg Gruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kongsberg Gruppen ASA has no effect on the direction of Transdigm Group i.e., Transdigm Group and Kongsberg Gruppen go up and down completely randomly.
Pair Corralation between Transdigm Group and Kongsberg Gruppen
Considering the 90-day investment horizon Transdigm Group Incorporated is expected to generate 0.64 times more return on investment than Kongsberg Gruppen. However, Transdigm Group Incorporated is 1.55 times less risky than Kongsberg Gruppen. It trades about -0.01 of its potential returns per unit of risk. Kongsberg Gruppen ASA is currently generating about -0.14 per unit of risk. If you would invest 125,849 in Transdigm Group Incorporated on October 10, 2024 and sell it today you would lose (636.00) from holding Transdigm Group Incorporated or give up 0.51% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Transdigm Group Incorporated vs. Kongsberg Gruppen ASA
Performance |
Timeline |
Transdigm Group |
Kongsberg Gruppen ASA |
Transdigm Group and Kongsberg Gruppen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Transdigm Group and Kongsberg Gruppen
The main advantage of trading using opposite Transdigm Group and Kongsberg Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transdigm Group position performs unexpectedly, Kongsberg Gruppen 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 Kongsberg Gruppen will offset losses from the drop in Kongsberg Gruppen's long position.Transdigm Group vs. HEICO | Transdigm Group vs. L3Harris Technologies | Transdigm Group vs. Huntington Ingalls Industries | Transdigm Group vs. AeroVironment |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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