Correlation Between Dentsply Sirona and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Dentsply Sirona 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 Dentsply Sirona and Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dentsply Sirona and Raytheon Technologies Corp, you can compare the effects of market volatilities on Dentsply Sirona 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 Dentsply Sirona with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dentsply Sirona and Raytheon Technologies.
Diversification Opportunities for Dentsply Sirona and Raytheon Technologies
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dentsply and Raytheon is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Dentsply Sirona 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 Dentsply Sirona 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 Dentsply Sirona i.e., Dentsply Sirona and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Dentsply Sirona and Raytheon Technologies
Assuming the 90 days trading horizon Dentsply Sirona is expected to generate 1.64 times more return on investment than Raytheon Technologies. However, Dentsply Sirona is 1.64 times more volatile than Raytheon Technologies Corp. It trades about 0.39 of its potential returns per unit of risk. Raytheon Technologies Corp is currently generating about -0.17 per unit of risk. If you would invest 1,749 in Dentsply Sirona on September 13, 2024 and sell it today you would earn a total of 280.00 from holding Dentsply Sirona or generate 16.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dentsply Sirona vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Dentsply Sirona |
| Raytheon Technologies |
Dentsply Sirona and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dentsply Sirona and Raytheon Technologies
The main advantage of trading using opposite Dentsply Sirona and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dentsply Sirona 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.| Dentsply Sirona vs. Gaztransport et Technigaz | Dentsply Sirona vs. Elmos Semiconductor SE | Dentsply Sirona vs. DXC Technology Co | Dentsply Sirona vs. Nordic Semiconductor ASA |
| Raytheon Technologies vs. Samsung Electronics Co | Raytheon Technologies vs. Samsung Electronics Co | Raytheon Technologies vs. Hyundai Motor | Raytheon Technologies vs. Reliance Industries Ltd |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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