Correlation Between Raytheon Technologies and Safran SA
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and Safran SA 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 Safran SA 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 Safran SA, you can compare the effects of market volatilities on Raytheon Technologies and Safran SA 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 Safran SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Safran SA.
Diversification Opportunities for Raytheon Technologies and Safran SA
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Raytheon and Safran is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and Safran SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safran SA 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 Safran SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safran SA has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Safran SA go up and down completely randomly.
Pair Corralation between Raytheon Technologies and Safran SA
Considering the 90-day investment horizon Raytheon Technologies Corp is expected to generate 0.84 times more return on investment than Safran SA. However, Raytheon Technologies Corp is 1.19 times less risky than Safran SA. It trades about 0.16 of its potential returns per unit of risk. Safran SA is currently generating about 0.09 per unit of risk. If you would invest 7,945 in Raytheon Technologies Corp on September 3, 2024 and sell it today you would earn a total of 4,238 from holding Raytheon Technologies Corp or generate 53.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raytheon Technologies Corp vs. Safran SA
Performance |
| Timeline |
| Raytheon Technologies |
| Safran SA |
Raytheon Technologies and Safran SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and Safran SA
The main advantage of trading using opposite Raytheon Technologies and Safran SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Safran SA 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 Safran SA will offset losses from the drop in Safran SA's long position.| Raytheon Technologies vs. Highway Holdings Limited | Raytheon Technologies vs. QCR Holdings | Raytheon Technologies vs. Partner Communications | Raytheon Technologies vs. Acumen Pharmaceuticals |
| Safran SA vs. Airbus Group NV | Safran SA vs. Moog Inc | Safran SA vs. BAE Systems PLC | Safran SA vs. Airbus Group SE |
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..
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