Correlation Between Fundo Investimento and Raytheon Technologies

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

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

Diversification Opportunities for Fundo Investimento and Raytheon Technologies

-0.21

Correlation Coefficient

Fundo Investimento  Raytheon Technologies

Very good diversification

The 3 months correlation between Fundo and Raytheon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fundo Investimento Imobiliario and Raytheon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Fundo Investimento 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 Fundo Investimento Imobiliario 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 Fundo Investimento i.e., Fundo Investimento and Raytheon Technologies go up and down completely randomly.

Pair Corralation between Fundo Investimento and Raytheon Technologies

Assuming the 90 days trading horizon Fundo Investimento Imobiliario is expected to generate 0.95 times more return on investment than Raytheon Technologies. However, Fundo Investimento Imobiliario is 1.05 times less risky than Raytheon Technologies. It trades about 0.38 of its potential returns per unit of risk. Raytheon Technologies is currently generating about 0.04 per unit of risk. If you would invest  7,862  in Fundo Investimento Imobiliario on October 6, 2024 and sell it today you would earn a total of  669.00  from holding Fundo Investimento Imobiliario or generate 8.51% return on investment over 90 days.

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

Fundo Investimento Imobiliario  vs.  Raytheon Technologies

Fundo Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo Investimento Imobiliario has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong essential indicators, Fundo Investimento is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Raytheon Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Raytheon Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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 Fundo Investimento and Raytheon Technologies

The main advantage of trading using opposite Fundo Investimento and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundo Investimento 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 Fundo Investimento Imobiliario 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.