Correlation Between LPKF Laser and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both LPKF Laser 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 LPKF Laser and Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPKF Laser Electronics and Raytheon Technologies Corp, you can compare the effects of market volatilities on LPKF Laser 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 LPKF Laser with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Raytheon Technologies.
Diversification Opportunities for LPKF Laser and Raytheon Technologies
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LPKF and Raytheon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and LPKF Laser 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 LPKF Laser Electronics 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 LPKF Laser i.e., LPKF Laser and Raytheon Technologies go up and down completely randomly.
Pair Corralation between LPKF Laser and Raytheon Technologies
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to under-perform the Raytheon Technologies. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 2.2 times less risky than Raytheon Technologies. The stock trades about -0.06 of its potential returns per unit of risk. The Raytheon Technologies Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 11,854 in Raytheon Technologies Corp on September 2, 2024 and sell it today you would earn a total of 223.00 from holding Raytheon Technologies Corp or generate 1.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Raytheon Technologies Corp
Performance |
| Timeline |
| LPKF Laser Electronics |
| Raytheon Technologies |
LPKF Laser and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Raytheon Technologies
The main advantage of trading using opposite LPKF Laser and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser 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.| LPKF Laser vs. Uniper SE | LPKF Laser vs. Mulberry Group PLC | LPKF Laser vs. London Security Plc | LPKF Laser vs. Triad Group PLC |
| Raytheon Technologies vs. International Consolidated Airlines | Raytheon Technologies vs. STMicroelectronics NV | Raytheon Technologies vs. Leroy Seafood Group | Raytheon Technologies vs. Roebuck Food 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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