Correlation Between Appian Corp and Textron
Can any of the company-specific risk be diversified away by investing in both Appian Corp 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 Appian Corp and Textron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Appian Corp and Textron, you can compare the effects of market volatilities on Appian Corp 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 Appian Corp with a short position of Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Appian Corp and Textron.
Diversification Opportunities for Appian Corp and Textron
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Appian and Textron is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Appian Corp and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron and Appian Corp 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 Appian Corp 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 Appian Corp i.e., Appian Corp and Textron go up and down completely randomly.
Pair Corralation between Appian Corp and Textron
Given the investment horizon of 90 days Appian Corp is expected to generate 2.23 times more return on investment than Textron. However, Appian Corp is 2.23 times more volatile than Textron. It trades about -0.15 of its potential returns per unit of risk. Textron is currently generating about -0.41 per unit of risk. If you would invest 3,835 in Appian Corp on September 24, 2024 and sell it today you would lose (358.00) from holding Appian Corp or give up 9.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Appian Corp vs. Textron
Performance |
| Timeline |
| Appian Corp |
| Textron |
Appian Corp and Textron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Appian Corp and Textron
The main advantage of trading using opposite Appian Corp and Textron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appian Corp 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.The idea behind Appian Corp and Textron 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.| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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