Correlation Between Huntington Ingalls and Hensoldt
Can any of the company-specific risk be diversified away by investing in both Huntington Ingalls and Hensoldt 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 Huntington Ingalls and Hensoldt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntington Ingalls Industries and Hensoldt AG, you can compare the effects of market volatilities on Huntington Ingalls and Hensoldt 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 Huntington Ingalls with a short position of Hensoldt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntington Ingalls and Hensoldt.
Diversification Opportunities for Huntington Ingalls and Hensoldt
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Huntington and Hensoldt is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Ingalls Industries and Hensoldt AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hensoldt AG and Huntington Ingalls 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 Huntington Ingalls Industries are associated (or correlated) with Hensoldt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hensoldt AG has no effect on the direction of Huntington Ingalls i.e., Huntington Ingalls and Hensoldt go up and down completely randomly.
Pair Corralation between Huntington Ingalls and Hensoldt
Considering the 90-day investment horizon Huntington Ingalls Industries is expected to generate 3.1 times more return on investment than Hensoldt. However, Huntington Ingalls is 3.1 times more volatile than Hensoldt AG. It trades about 0.13 of its potential returns per unit of risk. Hensoldt AG is currently generating about -0.22 per unit of risk. If you would invest 18,795 in Huntington Ingalls Industries on September 2, 2024 and sell it today you would earn a total of 997.00 from holding Huntington Ingalls Industries or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huntington Ingalls Industries vs. Hensoldt AG
Performance |
| Timeline |
| Huntington Ingalls |
| Hensoldt AG |
Huntington Ingalls and Hensoldt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntington Ingalls and Hensoldt
The main advantage of trading using opposite Huntington Ingalls and Hensoldt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Ingalls position performs unexpectedly, Hensoldt 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 Hensoldt will offset losses from the drop in Hensoldt's long position.| Huntington Ingalls vs. Lockheed Martin | Huntington Ingalls vs. General Dynamics | Huntington Ingalls vs. Raytheon Technologies Corp | Huntington Ingalls vs. L3Harris Technologies |
| Hensoldt vs. Rheinmetall AG ADR | Hensoldt vs. Heico | Hensoldt vs. AeroVironment | Hensoldt vs. Transdigm Group Incorporated |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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