Correlation Between Raytheon Technologies and L3Harris Technologies
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and L3Harris 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 Raytheon Technologies and L3Harris Technologies 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 L3Harris Technologies, you can compare the effects of market volatilities on Raytheon Technologies and L3Harris 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 Raytheon Technologies with a short position of L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and L3Harris Technologies.
Diversification Opportunities for Raytheon Technologies and L3Harris Technologies
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Raytheon and L3Harris is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies 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 L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and L3Harris Technologies go up and down completely randomly.
Pair Corralation between Raytheon Technologies and L3Harris Technologies
Assuming the 90 days trading horizon Raytheon Technologies Corp is expected to under-perform the L3Harris Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Raytheon Technologies Corp is 1.24 times less risky than L3Harris Technologies. The stock trades about -0.1 of its potential returns per unit of risk. The L3Harris Technologies is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 24,928 in L3Harris Technologies on August 29, 2024 and sell it today you would lose (446.00) from holding L3Harris Technologies or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raytheon Technologies Corp vs. L3Harris Technologies
Performance |
| Timeline |
| Raytheon Technologies |
| L3Harris Technologies |
Raytheon Technologies and L3Harris Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and L3Harris Technologies
The main advantage of trading using opposite Raytheon Technologies and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, L3Harris 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.| Raytheon Technologies vs. Lendinvest PLC | Raytheon Technologies vs. Neometals | Raytheon Technologies vs. Coor Service Management | Raytheon Technologies vs. Albion Technology General |
| L3Harris Technologies vs. Lendinvest PLC | L3Harris Technologies vs. Neometals | L3Harris Technologies vs. Coor Service Management | L3Harris Technologies vs. Albion Technology General |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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