Correlation Between Herald Investment and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Herald Investment 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 Herald Investment and Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herald Investment Trust and Raytheon Technologies Corp, you can compare the effects of market volatilities on Herald Investment 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 Herald Investment with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Raytheon Technologies.
Diversification Opportunities for Herald Investment and Raytheon Technologies
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Herald and Raytheon is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Herald Investment 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 Herald Investment Trust 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 Herald Investment i.e., Herald Investment and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Herald Investment and Raytheon Technologies
Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.85 times more return on investment than Raytheon Technologies. However, Herald Investment Trust is 1.17 times less risky than Raytheon Technologies. It trades about 0.49 of its potential returns per unit of risk. Raytheon Technologies Corp is currently generating about 0.07 per unit of risk. If you would invest 208,000 in Herald Investment Trust on September 2, 2024 and sell it today you would earn a total of 27,500 from holding Herald Investment Trust or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herald Investment Trust vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Herald Investment Trust |
| Raytheon Technologies |
Herald Investment and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and Raytheon Technologies
The main advantage of trading using opposite Herald Investment and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment 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.| Herald Investment vs. Zoom Video Communications | Herald Investment vs. Home Depot | Herald Investment vs. Tyson Foods Cl | Herald Investment vs. Spirent Communications plc |
| Raytheon Technologies vs. International Consolidated Airlines | Raytheon Technologies vs. STMicroelectronics NV | Raytheon Technologies vs. Leroy Seafood Group | Raytheon Technologies vs. Roebuck Food Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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