Correlation Between Entrada Therapeutics and RAYTHEON

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

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

Diversification Opportunities for Entrada Therapeutics and RAYTHEON

-0.02

Correlation Coefficient

Entrada Therapeutics  RAYTHEON

Good diversification

The 3 months correlation between Entrada and RAYTHEON is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Entrada Therapeutics and RAYTHEON TECHNOLOGIES PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAYTHEON TECHNOLOGIES and Entrada Therapeutics 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 Entrada Therapeutics 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 Entrada Therapeutics i.e., Entrada Therapeutics and RAYTHEON go up and down completely randomly.

Pair Corralation between Entrada Therapeutics and RAYTHEON

Given the investment horizon of 90 days Entrada Therapeutics is expected to generate 50.91 times less return on investment than RAYTHEON. But when comparing it to its historical volatility, Entrada Therapeutics is 19.0 times less risky than RAYTHEON. It trades about 0.03 of its potential returns per unit of risk. RAYTHEON TECHNOLOGIES PORATION is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7,004  in RAYTHEON TECHNOLOGIES PORATION on October 12, 2024 and sell it today you would lose (436.00) from holding RAYTHEON TECHNOLOGIES PORATION or give up 6.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.48%
Values	Daily Returns

Entrada Therapeutics  vs.  RAYTHEON TECHNOLOGIES PORATION

Entrada Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entrada Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

RAYTHEON TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Entrada Therapeutics and RAYTHEON

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