Correlation Between Raytheon Technologies and Renova Energia
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and Renova Energia 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 Renova Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies and Renova Energia SA, you can compare the effects of market volatilities on Raytheon Technologies and Renova Energia 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 Renova Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Renova Energia.
Diversification Opportunities for Raytheon Technologies and Renova Energia
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Raytheon and Renova is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and Renova Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renova Energia 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 are associated (or correlated) with Renova Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renova Energia SA has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Renova Energia go up and down completely randomly.
Pair Corralation between Raytheon Technologies and Renova Energia
Assuming the 90 days trading horizon Raytheon Technologies is expected to generate 0.54 times more return on investment than Renova Energia. However, Raytheon Technologies is 1.85 times less risky than Renova Energia. It trades about 0.12 of its potential returns per unit of risk. Renova Energia SA is currently generating about 0.02 per unit of risk. If you would invest 9,498 in Raytheon Technologies on September 5, 2024 and sell it today you would earn a total of 2,428 from holding Raytheon Technologies or generate 25.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raytheon Technologies vs. Renova Energia SA
Performance |
| Timeline |
| Raytheon Technologies |
| Renova Energia SA |
Raytheon Technologies and Renova Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and Renova Energia
The main advantage of trading using opposite Raytheon Technologies and Renova Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Renova Energia 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 Renova Energia will offset losses from the drop in Renova Energia's long position.| Raytheon Technologies vs. Global X Funds | Raytheon Technologies vs. Prudential Financial | Raytheon Technologies vs. Beyond Meat | Raytheon Technologies vs. Tres Tentos Agroindustrial |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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