Correlation Between Boeing and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Boeing 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 Boeing and Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Raytheon Technologies Corp, you can compare the effects of market volatilities on Boeing 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 Boeing with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Raytheon Technologies.
Diversification Opportunities for Boeing and Raytheon Technologies
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Boeing and Raytheon is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Boeing 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 The Boeing 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 Boeing i.e., Boeing and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Boeing and Raytheon Technologies
Allowing for the 90-day total investment horizon Boeing is expected to generate 3.92 times less return on investment than Raytheon Technologies. But when comparing it to its historical volatility, The Boeing is 1.04 times less risky than Raytheon Technologies. It trades about 0.09 of its potential returns per unit of risk. Raytheon Technologies Corp is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 11,601 in Raytheon Technologies Corp on November 3, 2024 and sell it today you would earn a total of 1,294 from holding Raytheon Technologies Corp or generate 11.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
The Boeing vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Boeing |
| Raytheon Technologies |
Boeing and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Raytheon Technologies
The main advantage of trading using opposite Boeing and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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.| Boeing vs. General Dynamics | Boeing vs. Rocket Lab USA | Boeing vs. SCOR PK | Boeing vs. Aquagold International |
| Raytheon Technologies vs. Northrop Grumman | Raytheon Technologies vs. General Dynamics | Raytheon Technologies vs. The Boeing | Raytheon Technologies vs. L3Harris Technologies |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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