Correlation Between L3Harris Technologies and MG Plc
Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies and MG Plc 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 MG Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L3Harris Technologies and MG Plc, you can compare the effects of market volatilities on L3Harris Technologies and MG Plc 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 MG Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and MG Plc.
Diversification Opportunities for L3Harris Technologies and MG Plc
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between L3Harris and MNG is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and MG Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MG 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 MG Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MG Plc has no effect on the direction of L3Harris Technologies i.e., L3Harris Technologies and MG Plc go up and down completely randomly.
Pair Corralation between L3Harris Technologies and MG Plc
Assuming the 90 days trading horizon L3Harris Technologies is expected to generate 1.11 times more return on investment than MG Plc. However, L3Harris Technologies is 1.11 times more volatile than MG Plc. It trades about 0.09 of its potential returns per unit of risk. MG Plc is currently generating about 0.02 per unit of risk. If you would invest 19,101 in L3Harris Technologies on September 3, 2024 and sell it today you would earn a total of 5,118 from holding L3Harris Technologies or generate 26.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
L3Harris Technologies vs. MG Plc
Performance |
| Timeline |
| L3Harris Technologies |
| MG Plc |
L3Harris Technologies and MG Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L3Harris Technologies and MG Plc
The main advantage of trading using opposite L3Harris Technologies and MG Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies position performs unexpectedly, MG Plc 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 MG Plc will offset losses from the drop in MG Plc's long position.| L3Harris Technologies vs. Catalyst Media Group | L3Harris Technologies vs. CATLIN GROUP | L3Harris Technologies vs. RTW Venture Fund | L3Harris Technologies vs. Secure Property Development |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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