Correlation Between Sixt Leasing and Northrop Grumman
Can any of the company-specific risk be diversified away by investing in both Sixt Leasing and Northrop Grumman 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 Sixt Leasing and Northrop Grumman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sixt Leasing SE and Northrop Grumman, you can compare the effects of market volatilities on Sixt Leasing and Northrop Grumman 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 Sixt Leasing with a short position of Northrop Grumman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sixt Leasing and Northrop Grumman.
Diversification Opportunities for Sixt Leasing and Northrop Grumman
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sixt and Northrop is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sixt Leasing SE and Northrop Grumman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northrop Grumman and Sixt Leasing 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 Sixt Leasing SE are associated (or correlated) with Northrop Grumman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northrop Grumman has no effect on the direction of Sixt Leasing i.e., Sixt Leasing and Northrop Grumman go up and down completely randomly.
Pair Corralation between Sixt Leasing and Northrop Grumman
Assuming the 90 days trading horizon Sixt Leasing SE is expected to under-perform the Northrop Grumman. But the stock apears to be less risky and, when comparing its historical volatility, Sixt Leasing SE is 1.09 times less risky than Northrop Grumman. The stock trades about -0.07 of its potential returns per unit of risk. The Northrop Grumman is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 44,078 in Northrop Grumman on September 2, 2024 and sell it today you would earn a total of 2,372 from holding Northrop Grumman or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sixt Leasing SE vs. Northrop Grumman
Performance |
| Timeline |
| Sixt Leasing SE |
| Northrop Grumman |
Sixt Leasing and Northrop Grumman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sixt Leasing and Northrop Grumman
The main advantage of trading using opposite Sixt Leasing and Northrop Grumman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixt Leasing position performs unexpectedly, Northrop Grumman 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 Northrop Grumman will offset losses from the drop in Northrop Grumman's long position.| Sixt Leasing vs. Bausch Health Companies | Sixt Leasing vs. ANGLER GAMING PLC | Sixt Leasing vs. Bumrungrad Hospital Public | Sixt Leasing vs. EHEALTH |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |