Correlation Between Raytheon Technologies and Batm Advanced

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Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and Batm Advanced 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 Batm Advanced 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 Batm Advanced Communications, you can compare the effects of market volatilities on Raytheon Technologies and Batm Advanced 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 Batm Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Batm Advanced.

Diversification Opportunities for Raytheon Technologies and Batm Advanced

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Raytheon and Batm is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and Batm Advanced Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batm Advanced Commun 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 Batm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batm Advanced Commun has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Batm Advanced go up and down completely randomly.

Pair Corralation between Raytheon Technologies and Batm Advanced

Assuming the 90 days trading horizon Raytheon Technologies Corp is expected to generate 0.52 times more return on investment than Batm Advanced. However, Raytheon Technologies Corp is 1.93 times less risky than Batm Advanced. It trades about 0.55 of its potential returns per unit of risk. Batm Advanced Communications is currently generating about 0.03 per unit of risk. If you would invest  11,420  in Raytheon Technologies Corp on November 7, 2024 and sell it today you would earn a total of  1,460  from holding Raytheon Technologies Corp or generate 12.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Raytheon Technologies Corp  vs.  Batm Advanced Communications

 Performance 
       Timeline  
Raytheon Technologies 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Raytheon Technologies Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Raytheon Technologies may actually be approaching a critical reversion point that can send shares even higher in March 2025.
Batm Advanced Commun 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Batm Advanced Communications are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Batm Advanced is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Raytheon Technologies and Batm Advanced Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Raytheon Technologies and Batm Advanced

The main advantage of trading using opposite Raytheon Technologies and Batm Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Batm Advanced 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 Batm Advanced will offset losses from the drop in Batm Advanced's long position.
The idea behind Raytheon Technologies Corp and Batm Advanced Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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