Correlation Between RTX AS and Columbus
Can any of the company-specific risk be diversified away by investing in both RTX AS and Columbus 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 RTX AS and Columbus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RTX AS and Columbus AS, you can compare the effects of market volatilities on RTX AS and Columbus 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 RTX AS with a short position of Columbus. Check out your portfolio center. Please also check ongoing floating volatility patterns of RTX AS and Columbus.
Diversification Opportunities for RTX AS and Columbus
Poor diversification
The 3 months correlation between RTX and Columbus is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding RTX AS and Columbus AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus AS and RTX AS 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 RTX AS are associated (or correlated) with Columbus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbus AS has no effect on the direction of RTX AS i.e., RTX AS and Columbus go up and down completely randomly.
Pair Corralation between RTX AS and Columbus
Assuming the 90 days trading horizon RTX AS is expected to under-perform the Columbus. In addition to that, RTX AS is 1.39 times more volatile than Columbus AS. It trades about -0.04 of its total potential returns per unit of risk. Columbus AS is currently generating about 0.09 per unit of volatility. If you would invest 619.00 in Columbus AS on November 19, 2024 and sell it today you would earn a total of 636.00 from holding Columbus AS or generate 102.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RTX AS vs. Columbus AS
Performance |
| Timeline |
| RTX AS |
| Columbus AS |
RTX AS and Columbus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RTX AS and Columbus
The main advantage of trading using opposite RTX AS and Columbus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RTX AS position performs unexpectedly, Columbus 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 Columbus will offset losses from the drop in Columbus' long position.The idea behind RTX AS and Columbus AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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