Correlation Between Raytheon Technologies and GX AI
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and GX AI 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 GX AI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies and GX AI TECH, you can compare the effects of market volatilities on Raytheon Technologies and GX AI 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 GX AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and GX AI.
Diversification Opportunities for Raytheon Technologies and GX AI
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Raytheon and BAIQ39 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and GX AI TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GX AI TECH 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 are associated (or correlated) with GX AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GX AI TECH has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and GX AI go up and down completely randomly.
Pair Corralation between Raytheon Technologies and GX AI
Assuming the 90 days trading horizon Raytheon Technologies is expected to generate 1.62 times less return on investment than GX AI. In addition to that, Raytheon Technologies is 1.18 times more volatile than GX AI TECH. It trades about 0.07 of its total potential returns per unit of risk. GX AI TECH is currently generating about 0.14 per unit of volatility. If you would invest 4,745 in GX AI TECH on September 19, 2024 and sell it today you would earn a total of 3,457 from holding GX AI TECH or generate 72.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 74.26% |
| Values | Daily Returns |
Raytheon Technologies vs. GX AI TECH
Performance |
| Timeline |
| Raytheon Technologies |
| GX AI TECH |
Raytheon Technologies and GX AI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and GX AI
The main advantage of trading using opposite Raytheon Technologies and GX AI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, GX AI 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 GX AI will offset losses from the drop in GX AI's long position.| Raytheon Technologies vs. Taurus Armas SA | Raytheon Technologies vs. Schulz SA | Raytheon Technologies vs. Petro Rio SA | Raytheon Technologies vs. Movida Participaes SA |
| GX AI vs. GP Investments | GX AI vs. United States Steel | GX AI vs. Paycom Software | GX AI vs. MAHLE Metal Leve |
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.
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