Correlation Between Beyond Meat and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Beyond Meat and Raytheon Technologies 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 Beyond Meat and Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beyond Meat and Raytheon Technologies, you can compare the effects of market volatilities on Beyond Meat and Raytheon Technologies 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 Beyond Meat with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beyond Meat and Raytheon Technologies.
Diversification Opportunities for Beyond Meat and Raytheon Technologies
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Beyond and Raytheon is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Meat and Raytheon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Beyond Meat 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 Beyond Meat are associated (or correlated) with Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Beyond Meat i.e., Beyond Meat and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Beyond Meat and Raytheon Technologies
Assuming the 90 days trading horizon Beyond Meat is expected to under-perform the Raytheon Technologies. In addition to that, Beyond Meat is 3.03 times more volatile than Raytheon Technologies. It trades about -0.01 of its total potential returns per unit of risk. Raytheon Technologies is currently generating about 0.08 per unit of volatility. If you would invest 7,870 in Raytheon Technologies on September 4, 2024 and sell it today you would earn a total of 4,120 from holding Raytheon Technologies or generate 52.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.15% |
| Values | Daily Returns |
Beyond Meat vs. Raytheon Technologies
Performance |
| Timeline |
| Beyond Meat |
| Raytheon Technologies |
Beyond Meat and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beyond Meat and Raytheon Technologies
The main advantage of trading using opposite Beyond Meat and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beyond Meat position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' long position.| Beyond Meat vs. HDFC Bank Limited | Beyond Meat vs. Multilaser Industrial SA | Beyond Meat vs. Deutsche Bank Aktiengesellschaft | Beyond Meat vs. American Airlines Group |
| Raytheon Technologies vs. Lockheed Martin | Raytheon Technologies vs. Northrop Grumman | Raytheon Technologies vs. General Dynamics |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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