Correlation Between Raytheon Technologies and Bank Of
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and Bank Of 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 Bank Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies and The Bank of, you can compare the effects of market volatilities on Raytheon Technologies and Bank Of 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 Bank Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Bank Of.
Diversification Opportunities for Raytheon Technologies and Bank Of
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Raytheon and Bank is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Bank 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 Bank Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Bank has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Bank Of go up and down completely randomly.
Pair Corralation between Raytheon Technologies and Bank Of
Assuming the 90 days trading horizon Raytheon Technologies is expected to generate 1.86 times less return on investment than Bank Of. In addition to that, Raytheon Technologies is 1.26 times more volatile than The Bank of. It trades about 0.08 of its total potential returns per unit of risk. The Bank of is currently generating about 0.18 per unit of volatility. If you would invest 20,925 in The Bank of on August 31, 2024 and sell it today you would earn a total of 28,507 from holding The Bank of or generate 136.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.7% |
| Values | Daily Returns |
Raytheon Technologies vs. The Bank of
Performance |
| Timeline |
| Raytheon Technologies |
| The Bank |
Raytheon Technologies and Bank Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and Bank Of
The main advantage of trading using opposite Raytheon Technologies and Bank Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Bank Of 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 Bank Of will offset losses from the drop in Bank Of's long position.| Raytheon Technologies vs. Taurus Armas SA | Raytheon Technologies vs. Fras le SA | Raytheon Technologies vs. Western Digital | Raytheon Technologies vs. Energisa SA |
| Bank Of vs. Banco BTG Pactual | Bank Of vs. Banco BTG Pactual | Bank Of vs. Bradespar SA | Bank Of vs. Hsi Malls Fundo |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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