Correlation Between Raytheon Technologies and AeroVironment
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and AeroVironment 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 Raytheon Technologies and AeroVironment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies Corp and AeroVironment, you can compare the effects of market volatilities on Raytheon Technologies and AeroVironment 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 Raytheon Technologies with a short position of AeroVironment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and AeroVironment.
Diversification Opportunities for Raytheon Technologies and AeroVironment
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Raytheon and AeroVironment is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and AeroVironment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroVironment and Raytheon Technologies 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 Raytheon Technologies Corp are associated (or correlated) with AeroVironment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AeroVironment has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and AeroVironment go up and down completely randomly.
Pair Corralation between Raytheon Technologies and AeroVironment
Considering the 90-day investment horizon Raytheon Technologies Corp is expected to generate 0.81 times more return on investment than AeroVironment. However, Raytheon Technologies Corp is 1.23 times less risky than AeroVironment. It trades about 0.33 of its potential returns per unit of risk. AeroVironment is currently generating about 0.18 per unit of risk. If you would invest 11,663 in Raytheon Technologies Corp on October 23, 2024 and sell it today you would earn a total of 912.00 from holding Raytheon Technologies Corp or generate 7.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Raytheon Technologies Corp vs. AeroVironment
Performance |
| Timeline |
| Raytheon Technologies |
| AeroVironment |
Raytheon Technologies and AeroVironment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and AeroVironment
The main advantage of trading using opposite Raytheon Technologies and AeroVironment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, AeroVironment 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 AeroVironment will offset losses from the drop in AeroVironment's long position.| Raytheon Technologies vs. Northrop Grumman | Raytheon Technologies vs. General Dynamics | Raytheon Technologies vs. The Boeing | Raytheon Technologies vs. L3Harris Technologies |
| AeroVironment vs. L3Harris Technologies | AeroVironment vs. Mercury Systems | AeroVironment vs. Textron | AeroVironment 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |