Correlation Between Mercury Systems and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Mercury Systems and Raytheon Technologies 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 Mercury Systems and Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercury Systems and Raytheon Technologies Corp, you can compare the effects of market volatilities on Mercury Systems and Raytheon Technologies 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 Mercury Systems with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Systems and Raytheon Technologies.
Diversification Opportunities for Mercury Systems and Raytheon Technologies
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mercury and Raytheon is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Systems and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Mercury Systems 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 Mercury Systems are associated (or correlated) with Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Mercury Systems i.e., Mercury Systems and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Mercury Systems and Raytheon Technologies
Given the investment horizon of 90 days Mercury Systems is expected to generate 3.73 times more return on investment than Raytheon Technologies. However, Mercury Systems is 3.73 times more volatile than Raytheon Technologies Corp. It trades about 0.16 of its potential returns per unit of risk. Raytheon Technologies Corp is currently generating about -0.14 per unit of risk. If you would invest 3,380 in Mercury Systems on August 24, 2024 and sell it today you would earn a total of 618.00 from holding Mercury Systems or generate 18.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Systems vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Mercury Systems |
| Raytheon Technologies |
Mercury Systems and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Systems and Raytheon Technologies
The main advantage of trading using opposite Mercury Systems and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Systems position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' long position.| Mercury Systems vs. Raytheon Technologies Corp | Mercury Systems vs. General Dynamics | Mercury Systems vs. The Boeing | Mercury Systems vs. L3Harris Technologies |
| Raytheon Technologies vs. Northrop Grumman | Raytheon Technologies vs. General Dynamics | Raytheon Technologies vs. The Boeing | Raytheon Technologies vs. L3Harris Technologies |
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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