Correlation Between L3Harris Technologies and Safran SA
Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies and Safran SA 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 Safran SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L3Harris Technologies and Safran SA, you can compare the effects of market volatilities on L3Harris Technologies and Safran SA 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 Safran SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and Safran SA.
Diversification Opportunities for L3Harris Technologies and Safran SA
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between L3Harris and Safran is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and Safran SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safran SA 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 Safran SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safran SA has no effect on the direction of L3Harris Technologies i.e., L3Harris Technologies and Safran SA go up and down completely randomly.
Pair Corralation between L3Harris Technologies and Safran SA
Considering the 90-day investment horizon L3Harris Technologies is expected to generate 2.96 times less return on investment than Safran SA. But when comparing it to its historical volatility, L3Harris Technologies is 1.41 times less risky than Safran SA. It trades about 0.03 of its potential returns per unit of risk. Safran SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 15,363 in Safran SA on January 13, 2025 and sell it today you would earn a total of 8,034 from holding Safran SA or generate 52.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.54% |
| Values | Daily Returns |
L3Harris Technologies vs. Safran SA
Performance |
| Timeline |
| L3Harris Technologies |
| Safran SA |
L3Harris Technologies and Safran SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L3Harris Technologies and Safran SA
The main advantage of trading using opposite L3Harris Technologies and Safran SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies position performs unexpectedly, Safran SA 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 Safran SA will offset losses from the drop in Safran SA'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 |
| Safran SA vs. Airbus Group NV | Safran SA vs. Park Electrochemical | Safran SA vs. Rolls Royce Holdings PLC | Safran SA vs. Triumph 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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