Correlation Between Verizon Communications and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Verizon Communications 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 Verizon Communications and Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Raytheon Technologies Corp, you can compare the effects of market volatilities on Verizon Communications 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 Verizon Communications with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Raytheon Technologies.
Diversification Opportunities for Verizon Communications and Raytheon Technologies
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Verizon and Raytheon is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Verizon Communications 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 Verizon Communications 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 Verizon Communications i.e., Verizon Communications and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Verizon Communications and Raytheon Technologies
Assuming the 90 days trading horizon Verizon Communications is expected to under-perform the Raytheon Technologies. In addition to that, Verizon Communications is 1.2 times more volatile than Raytheon Technologies Corp. It trades about -0.21 of its total potential returns per unit of risk. Raytheon Technologies Corp is currently generating about 0.13 per unit of volatility. If you would invest 11,964 in Raytheon Technologies Corp on October 26, 2024 and sell it today you would earn a total of 619.00 from holding Raytheon Technologies Corp or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Verizon Communications |
| Raytheon Technologies |
Verizon Communications and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and Raytheon Technologies
The main advantage of trading using opposite Verizon Communications and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications 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.| Verizon Communications vs. Wheaton Precious Metals | Verizon Communications vs. GreenX Metals | Verizon Communications vs. Norman Broadbent Plc | Verizon Communications vs. Auto Trader Group |
| Raytheon Technologies vs. Cairo Communication SpA | Raytheon Technologies vs. Verizon Communications | Raytheon Technologies vs. Aeorema Communications Plc | Raytheon Technologies vs. Arrow Electronics |
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.
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