Correlation Between Triad Group and Raytheon Technologies

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

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

Diversification Opportunities for Triad Group and Raytheon Technologies

0.2

Correlation Coefficient

Triad Group  Raytheon Technologies

Modest diversification

The 3 months correlation between Triad and Raytheon is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Triad Group PLC and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Triad 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 Triad Group PLC 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 Triad Group i.e., Triad Group and Raytheon Technologies go up and down completely randomly.

Pair Corralation between Triad Group and Raytheon Technologies

Assuming the 90 days trading horizon Triad Group PLC is expected to under-perform the Raytheon Technologies. In addition to that, Triad Group is 1.74 times more volatile than Raytheon Technologies Corp. It trades about -0.5 of its total potential returns per unit of risk. Raytheon Technologies Corp is currently generating about -0.23 per unit of volatility. If you would invest  11,964  in Raytheon Technologies Corp on September 24, 2024 and sell it today you would lose (455.00) from holding Raytheon Technologies Corp or give up 3.8% of portfolio value over 90 days.

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

Triad Group PLC  vs.  Raytheon Technologies Corp

Triad Group PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Triad Group PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Triad Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Raytheon Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raytheon Technologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Raytheon Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Triad Group and Raytheon Technologies

The main advantage of trading using opposite Triad Group and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triad Group 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 Triad Group PLC and Raytheon Technologies Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.