Correlation Between Raytheon Technologies and American Homes
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and American 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 Raytheon Technologies and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies Corp and American Homes 4, you can compare the effects of market volatilities on Raytheon Technologies and American 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 Raytheon Technologies with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and American Homes.
Diversification Opportunities for Raytheon Technologies and American Homes
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Raytheon and American is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and Raytheon 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 Raytheon Technologies Corp are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and American Homes go up and down completely randomly.
Pair Corralation between Raytheon Technologies and American Homes
Assuming the 90 days trading horizon Raytheon Technologies Corp is expected to under-perform the American Homes. In addition to that, Raytheon Technologies is 1.28 times more volatile than American Homes 4. It trades about 0.0 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.21 per unit of volatility. If you would invest 3,674 in American Homes 4 on August 31, 2024 and sell it today you would earn a total of 203.00 from holding American Homes 4 or generate 5.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raytheon Technologies Corp vs. American Homes 4
Performance |
| Timeline |
| Raytheon Technologies |
| American Homes 4 |
Raytheon Technologies and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and American Homes
The main advantage of trading using opposite Raytheon Technologies and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, American 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 American Homes will offset losses from the drop in American Homes' long position.| Raytheon Technologies vs. Neometals | Raytheon Technologies vs. Coor Service Management | Raytheon Technologies vs. Aeorema Communications Plc | Raytheon Technologies vs. JLEN Environmental Assets |
| American Homes vs. Neometals | American Homes vs. Coor Service Management | American Homes vs. Aeorema Communications Plc | American Homes vs. JLEN Environmental Assets |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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