Correlation Between Raytheon Technologies and CBRE
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and CBRE 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 CBRE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies and CBRE Group, you can compare the effects of market volatilities on Raytheon Technologies and CBRE 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 CBRE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and CBRE.
Diversification Opportunities for Raytheon Technologies and CBRE
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Raytheon and CBRE is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and CBRE Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBRE Group 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 CBRE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBRE Group has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and CBRE go up and down completely randomly.
Pair Corralation between Raytheon Technologies and CBRE
Assuming the 90 days trading horizon Raytheon Technologies is expected to generate 11.21 times less return on investment than CBRE. But when comparing it to its historical volatility, Raytheon Technologies is 2.58 times less risky than CBRE. It trades about 0.06 of its potential returns per unit of risk. CBRE Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 61,080 in CBRE Group on August 31, 2024 and sell it today you would earn a total of 17,845 from holding CBRE Group or generate 29.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Raytheon Technologies vs. CBRE Group
Performance |
| Timeline |
| Raytheon Technologies |
| CBRE Group |
Raytheon Technologies and CBRE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and CBRE
The main advantage of trading using opposite Raytheon Technologies and CBRE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, CBRE 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 CBRE will offset losses from the drop in CBRE'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 |
| CBRE vs. Automatic Data Processing | CBRE vs. Verizon Communications | CBRE vs. Fidelity National Information | CBRE vs. Raytheon Technologies |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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