Correlation Between Rheinmetall and L3Harris Technologies
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and L3Harris 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 Rheinmetall and L3Harris Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and L3Harris Technologies, you can compare the effects of market volatilities on Rheinmetall and L3Harris 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 Rheinmetall with a short position of L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and L3Harris Technologies.
Diversification Opportunities for Rheinmetall and L3Harris Technologies
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Rheinmetall and L3Harris is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies and Rheinmetall 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 Rheinmetall AG are associated (or correlated) with L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of Rheinmetall i.e., Rheinmetall and L3Harris Technologies go up and down completely randomly.
Pair Corralation between Rheinmetall and L3Harris Technologies
Assuming the 90 days horizon Rheinmetall AG is expected to generate 1.73 times more return on investment than L3Harris Technologies. However, Rheinmetall is 1.73 times more volatile than L3Harris Technologies. It trades about 0.45 of its potential returns per unit of risk. L3Harris Technologies is currently generating about -0.06 per unit of risk. If you would invest 50,280 in Rheinmetall AG on September 4, 2024 and sell it today you would earn a total of 15,870 from holding Rheinmetall AG or generate 31.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rheinmetall AG vs. L3Harris Technologies
Performance |
| Timeline |
| Rheinmetall AG |
| L3Harris Technologies |
Rheinmetall and L3Harris Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and L3Harris Technologies
The main advantage of trading using opposite Rheinmetall and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, L3Harris 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.| Rheinmetall vs. Lockheed Martin | Rheinmetall vs. BAE Systems PLC | Rheinmetall vs. Qinetiq Group PLC | Rheinmetall vs. Leonardo SpA ADR |
| L3Harris Technologies vs. Archer Aviation | L3Harris Technologies vs. Rocket Lab USA | L3Harris Technologies vs. Lilium NV | L3Harris Technologies vs. HEICO |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Transaction History View history of all your transactions and understand their impact on performance |