Correlation Between Ibstock PLC and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Ibstock PLC 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 Ibstock PLC and Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ibstock PLC and Raytheon Technologies Corp, you can compare the effects of market volatilities on Ibstock PLC 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 Ibstock PLC with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ibstock PLC and Raytheon Technologies.
Diversification Opportunities for Ibstock PLC and Raytheon Technologies
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ibstock and Raytheon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ibstock PLC and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Ibstock PLC 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 Ibstock PLC 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 Ibstock PLC i.e., Ibstock PLC and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Ibstock PLC and Raytheon Technologies
Assuming the 90 days trading horizon Ibstock PLC is expected to generate 1.28 times more return on investment than Raytheon Technologies. However, Ibstock PLC is 1.28 times more volatile than Raytheon Technologies Corp. It trades about -0.08 of its potential returns per unit of risk. Raytheon Technologies Corp is currently generating about -0.23 per unit of risk. If you would invest 19,460 in Ibstock PLC on September 12, 2024 and sell it today you would lose (560.00) from holding Ibstock PLC or give up 2.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ibstock PLC vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Ibstock PLC |
| Raytheon Technologies |
Ibstock PLC and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ibstock PLC and Raytheon Technologies
The main advantage of trading using opposite Ibstock PLC and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ibstock PLC 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.| Ibstock PLC vs. Givaudan SA | Ibstock PLC vs. Antofagasta PLC | Ibstock PLC vs. Ferrexpo PLC | Ibstock PLC vs. Atalaya Mining |
| Raytheon Technologies vs. Power Metal Resources | Raytheon Technologies vs. Adriatic Metals | Raytheon Technologies vs. Park Hotels Resorts | Raytheon Technologies vs. PPHE Hotel 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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