Correlation Between Terran Orbital and HEICO
Can any of the company-specific risk be diversified away by investing in both Terran Orbital and HEICO 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 Terran Orbital and HEICO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terran Orbital Corp and HEICO, you can compare the effects of market volatilities on Terran Orbital and HEICO 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 Terran Orbital with a short position of HEICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terran Orbital and HEICO.
Diversification Opportunities for Terran Orbital and HEICO
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Terran and HEICO is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Terran Orbital Corp and HEICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEICO and Terran Orbital 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 Terran Orbital Corp are associated (or correlated) with HEICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEICO has no effect on the direction of Terran Orbital i.e., Terran Orbital and HEICO go up and down completely randomly.
Pair Corralation between Terran Orbital and HEICO
Given the investment horizon of 90 days Terran Orbital Corp is expected to under-perform the HEICO. In addition to that, Terran Orbital is 5.07 times more volatile than HEICO. It trades about -0.02 of its total potential returns per unit of risk. HEICO is currently generating about 0.09 per unit of volatility. If you would invest 12,267 in HEICO on August 28, 2024 and sell it today you would earn a total of 9,181 from holding HEICO or generate 74.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.01% |
| Values | Daily Returns |
Terran Orbital Corp vs. HEICO
Performance |
| Timeline |
| Terran Orbital Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| HEICO |
Terran Orbital and HEICO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terran Orbital and HEICO
The main advantage of trading using opposite Terran Orbital and HEICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terran Orbital position performs unexpectedly, HEICO 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 HEICO will offset losses from the drop in HEICO's long position.| Terran Orbital vs. Intuitive Machines | Terran Orbital vs. Sidus Space | Terran Orbital vs. Redwire Corp | Terran Orbital vs. Rocket Lab USA |
| HEICO vs. Vertical Aerospace | HEICO vs. Rolls Royce Holdings plc | HEICO vs. Embraer SA ADR | HEICO vs. Rocket Lab USA |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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