Correlation Between Raytheon Technologies and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and LPKF Laser 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 LPKF Laser 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 LPKF Laser Electronics, you can compare the effects of market volatilities on Raytheon Technologies and LPKF Laser 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 LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and LPKF Laser.
Diversification Opportunities for Raytheon Technologies and LPKF Laser
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Raytheon and LPKF is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics 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 LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and LPKF Laser go up and down completely randomly.
Pair Corralation between Raytheon Technologies and LPKF Laser
Assuming the 90 days trading horizon Raytheon Technologies Corp is expected to generate 2.25 times more return on investment than LPKF Laser. However, Raytheon Technologies is 2.25 times more volatile than LPKF Laser Electronics. It trades about 0.0 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.11 per unit of risk. If you would invest 12,140 in Raytheon Technologies Corp on August 31, 2024 and sell it today you would lose (39.00) from holding Raytheon Technologies Corp or give up 0.32% 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. LPKF Laser Electronics
Performance |
| Timeline |
| Raytheon Technologies |
| LPKF Laser Electronics |
Raytheon Technologies and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and LPKF Laser
The main advantage of trading using opposite Raytheon Technologies and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| Raytheon Technologies vs. Neometals | Raytheon Technologies vs. Coor Service Management | Raytheon Technologies vs. Aeorema Communications Plc | Raytheon Technologies vs. JLEN Environmental Assets |
| LPKF Laser vs. Neometals | LPKF Laser vs. Coor Service Management | LPKF Laser vs. Aeorema Communications Plc | LPKF Laser 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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