Correlation Between Raytheon Technologies and Virgin Galactic
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and Virgin Galactic 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 Virgin Galactic 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 Virgin Galactic Holdings, you can compare the effects of market volatilities on Raytheon Technologies and Virgin Galactic 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 Virgin Galactic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Virgin Galactic.
Diversification Opportunities for Raytheon Technologies and Virgin Galactic
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Raytheon and Virgin is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and Virgin Galactic Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Galactic Holdings 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 Virgin Galactic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Galactic Holdings has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Virgin Galactic go up and down completely randomly.
Pair Corralation between Raytheon Technologies and Virgin Galactic
Considering the 90-day investment horizon Raytheon Technologies Corp is expected to under-perform the Virgin Galactic. But the stock apears to be less risky and, when comparing its historical volatility, Raytheon Technologies Corp is 4.62 times less risky than Virgin Galactic. The stock trades about -0.04 of its potential returns per unit of risk. The Virgin Galactic Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 735.00 in Virgin Galactic Holdings on August 30, 2024 and sell it today you would lose (32.00) from holding Virgin Galactic Holdings or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raytheon Technologies Corp vs. Virgin Galactic Holdings
Performance |
| Timeline |
| Raytheon Technologies |
| Virgin Galactic Holdings |
Raytheon Technologies and Virgin Galactic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and Virgin Galactic
The main advantage of trading using opposite Raytheon Technologies and Virgin Galactic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Virgin Galactic 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 Virgin Galactic will offset losses from the drop in Virgin Galactic's long position.| Raytheon Technologies vs. Northrop Grumman | Raytheon Technologies vs. General Dynamics | Raytheon Technologies vs. The Boeing | Raytheon Technologies vs. L3Harris Technologies |
| Virgin Galactic vs. Planet Labs PBC | Virgin Galactic vs. Eve Holding | Virgin Galactic vs. Redwire Corp | Virgin Galactic vs. Lockheed Martin |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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