Correlation Between L3Harris Technologies and Vertical Aerospace
Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies and Vertical Aerospace 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 L3Harris Technologies and Vertical Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L3Harris Technologies and Vertical Aerospace, you can compare the effects of market volatilities on L3Harris Technologies and Vertical Aerospace 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 L3Harris Technologies with a short position of Vertical Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and Vertical Aerospace.
Diversification Opportunities for L3Harris Technologies and Vertical Aerospace
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between L3Harris and Vertical is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and Vertical Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertical Aerospace and L3Harris Technologies 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 L3Harris Technologies are associated (or correlated) with Vertical Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertical Aerospace has no effect on the direction of L3Harris Technologies i.e., L3Harris Technologies and Vertical Aerospace go up and down completely randomly.
Pair Corralation between L3Harris Technologies and Vertical Aerospace
Considering the 90-day investment horizon L3Harris Technologies is expected to under-perform the Vertical Aerospace. But the stock apears to be less risky and, when comparing its historical volatility, L3Harris Technologies is 8.13 times less risky than Vertical Aerospace. The stock trades about -0.06 of its potential returns per unit of risk. The Vertical Aerospace is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 819.00 in Vertical Aerospace on November 2, 2024 and sell it today you would lose (332.00) from holding Vertical Aerospace or give up 40.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
L3Harris Technologies vs. Vertical Aerospace
Performance |
| Timeline |
| L3Harris Technologies |
| Vertical Aerospace |
L3Harris Technologies and Vertical Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L3Harris Technologies and Vertical Aerospace
The main advantage of trading using opposite L3Harris Technologies and Vertical Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies position performs unexpectedly, Vertical Aerospace 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 Vertical Aerospace will offset losses from the drop in Vertical Aerospace's long position.| L3Harris Technologies vs. Lockheed Martin | L3Harris Technologies vs. General Dynamics | L3Harris Technologies vs. Raytheon Technologies Corp | L3Harris Technologies vs. Huntington Ingalls Industries |
| Vertical Aerospace vs. Archer Aviation | Vertical Aerospace vs. Ehang Holdings | Vertical Aerospace vs. Rocket Lab USA | Vertical Aerospace vs. Lilium NV |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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