Correlation Between L3Harris Technologies and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies and Cairn Homes 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 L3Harris Technologies and Cairn Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L3Harris Technologies and Cairn Homes PLC, you can compare the effects of market volatilities on L3Harris Technologies and Cairn Homes 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 L3Harris Technologies with a short position of Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and Cairn Homes.
Diversification Opportunities for L3Harris Technologies and Cairn Homes
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between L3Harris and Cairn is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC and L3Harris Technologies 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 L3Harris Technologies are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of L3Harris Technologies i.e., L3Harris Technologies and Cairn Homes go up and down completely randomly.
Pair Corralation between L3Harris Technologies and Cairn Homes
Assuming the 90 days trading horizon L3Harris Technologies is expected to generate 1.32 times less return on investment than Cairn Homes. But when comparing it to its historical volatility, L3Harris Technologies is 1.35 times less risky than Cairn Homes. It trades about 0.06 of its potential returns per unit of risk. Cairn Homes PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 16,095 in Cairn Homes PLC on September 2, 2024 and sell it today you would earn a total of 1,005 from holding Cairn Homes PLC or generate 6.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
L3Harris Technologies vs. Cairn Homes PLC
Performance |
| Timeline |
| L3Harris Technologies |
| Cairn Homes PLC |
L3Harris Technologies and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L3Harris Technologies and Cairn Homes
The main advantage of trading using opposite L3Harris Technologies and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| L3Harris Technologies vs. Gaming Realms plc | L3Harris Technologies vs. MT Bank Corp | L3Harris Technologies vs. Discover Financial Services | L3Harris Technologies vs. PPHE Hotel Group |
| Cairn Homes vs. Rightmove PLC | Cairn Homes vs. Bioventix | Cairn Homes vs. VeriSign | Cairn Homes vs. Games Workshop Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |