Correlation Between Raytheon Technologies and Sage Group
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and Sage 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 Sage 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 Sage Group PLC, you can compare the effects of market volatilities on Raytheon Technologies and Sage 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 Sage Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Sage Group.
Diversification Opportunities for Raytheon Technologies and Sage Group
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Raytheon and Sage is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and Sage Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage 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 Sage Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Group PLC has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Sage Group go up and down completely randomly.
Pair Corralation between Raytheon Technologies and Sage Group
Assuming the 90 days trading horizon Raytheon Technologies is expected to generate 2.03 times less return on investment than Sage Group. But when comparing it to its historical volatility, Raytheon Technologies Corp is 1.79 times less risky than Sage Group. It trades about 0.09 of its potential returns per unit of risk. Sage Group PLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 107,528 in Sage Group PLC on October 26, 2024 and sell it today you would earn a total of 26,122 from holding Sage Group PLC or generate 24.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raytheon Technologies Corp vs. Sage Group PLC
Performance |
| Timeline |
| Raytheon Technologies |
| Sage Group PLC |
Raytheon Technologies and Sage Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and Sage Group
The main advantage of trading using opposite Raytheon Technologies and Sage Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Sage 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 Sage Group will offset losses from the drop in Sage Group's long position.| Raytheon Technologies vs. Cairo Communication SpA | Raytheon Technologies vs. Verizon Communications | Raytheon Technologies vs. Aeorema Communications Plc | Raytheon Technologies vs. Arrow Electronics |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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