Correlation Between L3Harris Technologies and Textron
Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies and Textron 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 Textron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L3Harris Technologies and Textron, you can compare the effects of market volatilities on L3Harris Technologies and Textron 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 Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and Textron.
Diversification Opportunities for L3Harris Technologies and Textron
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between L3Harris and Textron is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron 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 Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of L3Harris Technologies i.e., L3Harris Technologies and Textron go up and down completely randomly.
Pair Corralation between L3Harris Technologies and Textron
Considering the 90-day investment horizon L3Harris Technologies is expected to under-perform the Textron. But the stock apears to be less risky and, when comparing its historical volatility, L3Harris Technologies is 1.11 times less risky than Textron. The stock trades about -0.07 of its potential returns per unit of risk. The Textron is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,327 in Textron on August 28, 2024 and sell it today you would earn a total of 248.00 from holding Textron or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
L3Harris Technologies vs. Textron
Performance |
| Timeline |
| L3Harris Technologies |
| Textron |
L3Harris Technologies and Textron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L3Harris Technologies and Textron
The main advantage of trading using opposite L3Harris Technologies and Textron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies position performs unexpectedly, Textron 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 Textron will offset losses from the drop in Textron'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 |
| Textron vs. Hexcel | Textron vs. Huntington Ingalls Industries | Textron vs. Curtiss Wright | Textron vs. Mercury Systems |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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