Correlation Between HEICO and Huntington Ingalls
Can any of the company-specific risk be diversified away by investing in both HEICO and Huntington Ingalls 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 HEICO and Huntington Ingalls into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEICO and Huntington Ingalls Industries, you can compare the effects of market volatilities on HEICO and Huntington Ingalls 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 HEICO with a short position of Huntington Ingalls. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEICO and Huntington Ingalls.
Diversification Opportunities for HEICO and Huntington Ingalls
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HEICO and Huntington is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding HEICO and Huntington Ingalls Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Ingalls and HEICO 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 HEICO are associated (or correlated) with Huntington Ingalls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Ingalls has no effect on the direction of HEICO i.e., HEICO and Huntington Ingalls go up and down completely randomly.
Pair Corralation between HEICO and Huntington Ingalls
Assuming the 90 days horizon HEICO is expected to generate 0.26 times more return on investment than Huntington Ingalls. However, HEICO is 3.84 times less risky than Huntington Ingalls. It trades about 0.27 of its potential returns per unit of risk. Huntington Ingalls Industries is currently generating about -0.15 per unit of risk. If you would invest 19,689 in HEICO on August 25, 2024 and sell it today you would earn a total of 1,868 from holding HEICO or generate 9.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HEICO vs. Huntington Ingalls Industries
Performance |
| Timeline |
| HEICO |
| Huntington Ingalls |
HEICO and Huntington Ingalls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEICO and Huntington Ingalls
The main advantage of trading using opposite HEICO and Huntington Ingalls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEICO position performs unexpectedly, Huntington Ingalls 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 Huntington Ingalls will offset losses from the drop in Huntington Ingalls' long position.| HEICO vs. Vertical Aerospace | HEICO vs. Rolls Royce Holdings plc | HEICO vs. Embraer SA ADR | HEICO vs. Rocket Lab USA |
| Huntington Ingalls vs. Lockheed Martin | Huntington Ingalls vs. General Dynamics | Huntington Ingalls vs. Raytheon Technologies Corp | Huntington Ingalls 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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