Correlation Between BAE Systems and Qinetiq Group
Can any of the company-specific risk be diversified away by investing in both BAE Systems and Qinetiq 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 BAE Systems and Qinetiq Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BAE Systems PLC and Qinetiq Group PLC, you can compare the effects of market volatilities on BAE Systems and Qinetiq 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 BAE Systems with a short position of Qinetiq Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAE Systems and Qinetiq Group.
Diversification Opportunities for BAE Systems and Qinetiq Group
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BAE and Qinetiq is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding BAE Systems PLC and Qinetiq Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qinetiq Group PLC and BAE Systems 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 BAE Systems PLC are associated (or correlated) with Qinetiq Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qinetiq Group PLC has no effect on the direction of BAE Systems i.e., BAE Systems and Qinetiq Group go up and down completely randomly.
Pair Corralation between BAE Systems and Qinetiq Group
Assuming the 90 days horizon BAE Systems PLC is expected to generate 0.81 times more return on investment than Qinetiq Group. However, BAE Systems PLC is 1.23 times less risky than Qinetiq Group. It trades about -0.11 of its potential returns per unit of risk. Qinetiq Group PLC is currently generating about -0.1 per unit of risk. If you would invest 6,865 in BAE Systems PLC on September 12, 2024 and sell it today you would lose (870.00) from holding BAE Systems PLC or give up 12.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
BAE Systems PLC vs. Qinetiq Group PLC
Performance |
| Timeline |
| BAE Systems PLC |
| Qinetiq Group PLC |
BAE Systems and Qinetiq Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BAE Systems and Qinetiq Group
The main advantage of trading using opposite BAE Systems and Qinetiq Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAE Systems position performs unexpectedly, Qinetiq 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 Qinetiq Group will offset losses from the drop in Qinetiq Group's long position.| BAE Systems vs. Leonardo Spa | BAE Systems vs. QinetiQ Group plc | BAE Systems vs. Leonardo SpA ADR | BAE Systems vs. Huntington Ingalls Industries |
| Qinetiq Group vs. Northrop Grumman | Qinetiq Group vs. L3Harris Technologies | Qinetiq Group vs. General Dynamics | Qinetiq Group vs. Curtiss Wright |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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