Correlation Between Raytheon Technologies and JD Sports
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and JD Sports 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 JD Sports 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 JD Sports Fashion, you can compare the effects of market volatilities on Raytheon Technologies and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and JD Sports.
Diversification Opportunities for Raytheon Technologies and JD Sports
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Raytheon and JD Sports is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and JD Sports go up and down completely randomly.
Pair Corralation between Raytheon Technologies and JD Sports
Assuming the 90 days trading horizon Raytheon Technologies Corp is expected to generate 0.52 times more return on investment than JD Sports. However, Raytheon Technologies Corp is 1.91 times less risky than JD Sports. It trades about 0.04 of its potential returns per unit of risk. JD Sports Fashion is currently generating about 0.0 per unit of risk. If you would invest 9,336 in Raytheon Technologies Corp on September 12, 2024 and sell it today you would earn a total of 2,352 from holding Raytheon Technologies Corp or generate 25.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Raytheon Technologies Corp vs. JD Sports Fashion
Performance |
| Timeline |
| Raytheon Technologies |
| JD Sports Fashion |
Raytheon Technologies and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and JD Sports
The main advantage of trading using opposite Raytheon Technologies and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Raytheon Technologies vs. Power Metal Resources | Raytheon Technologies vs. Adriatic Metals | Raytheon Technologies vs. Park Hotels Resorts | Raytheon Technologies vs. PPHE Hotel Group |
| JD Sports vs. National Atomic Co | JD Sports vs. OTP Bank Nyrt | JD Sports vs. Samsung Electronics Co | JD Sports vs. Samsung Electronics Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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