Correlation Between Innovative Solutions and L3Harris Technologies
Can any of the company-specific risk be diversified away by investing in both Innovative Solutions and L3Harris 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 Innovative Solutions and L3Harris Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Solutions and and L3Harris Technologies, you can compare the effects of market volatilities on Innovative Solutions and L3Harris 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 Innovative Solutions with a short position of L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Solutions and L3Harris Technologies.
Diversification Opportunities for Innovative Solutions and L3Harris Technologies
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovative and L3Harris is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Solutions and and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies and Innovative Solutions 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 Innovative Solutions and are associated (or correlated) with L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of Innovative Solutions i.e., Innovative Solutions and L3Harris Technologies go up and down completely randomly.
Pair Corralation between Innovative Solutions and L3Harris Technologies
Given the investment horizon of 90 days Innovative Solutions and is expected to generate 0.91 times more return on investment than L3Harris Technologies. However, Innovative Solutions and is 1.1 times less risky than L3Harris Technologies. It trades about 0.24 of its potential returns per unit of risk. L3Harris Technologies is currently generating about 0.02 per unit of risk. If you would invest 717.00 in Innovative Solutions and on August 31, 2024 and sell it today you would earn a total of 57.00 from holding Innovative Solutions and or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Solutions and vs. L3Harris Technologies
Performance |
| Timeline |
| Innovative Solutions and |
| L3Harris Technologies |
Innovative Solutions and L3Harris Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Solutions and L3Harris Technologies
The main advantage of trading using opposite Innovative Solutions and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Solutions position performs unexpectedly, L3Harris 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.| Innovative Solutions vs. Park Electrochemical | Innovative Solutions vs. VSE Corporation | Innovative Solutions vs. Curtiss Wright | Innovative Solutions vs. Ducommun Incorporated |
| L3Harris Technologies vs. Lockheed Martin | L3Harris Technologies vs. General Dynamics | L3Harris Technologies vs. Raytheon Technologies Corp | L3Harris Technologies vs. Huntington Ingalls Industries |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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