Correlation Between Raytheon Technologies and Merit Group
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and Merit Group 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 Merit Group 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 Merit Group PLC, you can compare the effects of market volatilities on Raytheon Technologies and Merit Group 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 Merit Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Merit Group.
Diversification Opportunities for Raytheon Technologies and Merit Group
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Raytheon and Merit is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and Merit Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Group PLC 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 Merit Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Group PLC has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Merit Group go up and down completely randomly.
Pair Corralation between Raytheon Technologies and Merit Group
Assuming the 90 days trading horizon Raytheon Technologies Corp is expected to generate 0.34 times more return on investment than Merit Group. However, Raytheon Technologies Corp is 2.91 times less risky than Merit Group. It trades about 0.08 of its potential returns per unit of risk. Merit Group PLC is currently generating about -0.12 per unit of risk. If you would invest 10,638 in Raytheon Technologies Corp on September 1, 2024 and sell it today you would earn a total of 1,439 from holding Raytheon Technologies Corp or generate 13.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Raytheon Technologies Corp vs. Merit Group PLC
Performance |
| Timeline |
| Raytheon Technologies |
| Merit Group PLC |
Raytheon Technologies and Merit Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and Merit Group
The main advantage of trading using opposite Raytheon Technologies and Merit Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Merit Group 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 Merit Group will offset losses from the drop in Merit Group's long position.| Raytheon Technologies vs. Uniper SE | Raytheon Technologies vs. Mulberry Group PLC | Raytheon Technologies vs. London Security Plc | Raytheon Technologies vs. Triad Group PLC |
| Merit Group vs. Jacquet Metal Service | Merit Group vs. Zegona Communications Plc | Merit Group vs. GoldMining | Merit Group vs. Wheaton Precious Metals |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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