Correlation Between 502413BE6 and Marine Products

Can any of the company-specific risk be diversified away by investing in both 502413BE6 and Marine Products 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 502413BE6 and Marine Products into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between L3 TECHNOLOGIES INC and Marine Products, you can compare the effects of market volatilities on 502413BE6 and Marine Products 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 502413BE6 with a short position of Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of 502413BE6 and Marine Products.

Diversification Opportunities for 502413BE6 and Marine Products

0.38

Correlation Coefficient

502413BE6  Marine Products

Weak diversification

The 3 months correlation between 502413BE6 and Marine is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding L3 TECHNOLOGIES INC and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products and 502413BE6 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 L3 TECHNOLOGIES INC are associated (or correlated) with Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of 502413BE6 i.e., 502413BE6 and Marine Products go up and down completely randomly.

Pair Corralation between 502413BE6 and Marine Products

Assuming the 90 days trading horizon L3 TECHNOLOGIES INC is expected to generate 0.48 times more return on investment than Marine Products. However, L3 TECHNOLOGIES INC is 2.09 times less risky than Marine Products. It trades about 0.35 of its potential returns per unit of risk. Marine Products is currently generating about -0.06 per unit of risk. If you would invest  9,608  in L3 TECHNOLOGIES INC on December 24, 2024 and sell it today you would earn a total of  266.00  from holding L3 TECHNOLOGIES INC or generate 2.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	13.33%
Values	Daily Returns

L3 TECHNOLOGIES INC  vs.  Marine Products

L3 TECHNOLOGIES INC

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in L3 TECHNOLOGIES INC are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, 502413BE6 sustained solid returns over the last few months and may actually be approaching a breakup point.

Marine Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marine Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with 502413BE6 and Marine Products

The main advantage of trading using opposite 502413BE6 and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 502413BE6 position performs unexpectedly, Marine Products 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 Marine Products will offset losses from the drop in Marine Products' long position.

The idea behind L3 TECHNOLOGIES INC and Marine Products 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.