Correlation Between Aerojet Rocketdyne and Textron
Can any of the company-specific risk be diversified away by investing in both Aerojet Rocketdyne and Textron 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 Aerojet Rocketdyne and Textron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerojet Rocketdyne Holdings and Textron, you can compare the effects of market volatilities on Aerojet Rocketdyne and Textron 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 Aerojet Rocketdyne with a short position of Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerojet Rocketdyne and Textron.
Diversification Opportunities for Aerojet Rocketdyne and Textron
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aerojet and Textron is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aerojet Rocketdyne Holdings and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron and Aerojet Rocketdyne 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 Aerojet Rocketdyne Holdings are associated (or correlated) with Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of Aerojet Rocketdyne i.e., Aerojet Rocketdyne and Textron go up and down completely randomly.
Pair Corralation between Aerojet Rocketdyne and Textron
If you would invest 8,327 in Textron on August 28, 2024 and sell it today you would earn a total of 248.00 from holding Textron or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Aerojet Rocketdyne Holdings vs. Textron
Performance |
| Timeline |
| Aerojet Rocketdyne |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Textron |
Aerojet Rocketdyne and Textron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerojet Rocketdyne and Textron
The main advantage of trading using opposite Aerojet Rocketdyne and Textron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerojet Rocketdyne position performs unexpectedly, Textron 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 Textron will offset losses from the drop in Textron's long position.| Aerojet Rocketdyne vs. AAR Corp | Aerojet Rocketdyne vs. Curtiss Wright | Aerojet Rocketdyne vs. Hexcel | Aerojet Rocketdyne vs. Moog Inc |
| Textron vs. Hexcel | Textron vs. Huntington Ingalls Industries | Textron vs. Curtiss Wright | Textron vs. Mercury Systems |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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