Correlation Between Raytheon Technologies and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and Ross Stores 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 Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies and Ross Stores, you can compare the effects of market volatilities on Raytheon Technologies and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Ross Stores.
Diversification Opportunities for Raytheon Technologies and Ross Stores
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Raytheon and Ross is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Ross Stores go up and down completely randomly.
Pair Corralation between Raytheon Technologies and Ross Stores
Assuming the 90 days trading horizon Raytheon Technologies is expected to under-perform the Ross Stores. In addition to that, Raytheon Technologies is 1.0 times more volatile than Ross Stores. It trades about -0.06 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.48 per unit of volatility. If you would invest 40,158 in Ross Stores on September 12, 2024 and sell it today you would earn a total of 6,710 from holding Ross Stores or generate 16.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Raytheon Technologies vs. Ross Stores
Performance |
| Timeline |
| Raytheon Technologies |
| Ross Stores |
Raytheon Technologies and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and Ross Stores
The main advantage of trading using opposite Raytheon Technologies and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Raytheon Technologies vs. Take Two Interactive Software | Raytheon Technologies vs. Delta Air Lines | Raytheon Technologies vs. GX AI TECH | Raytheon Technologies vs. Uber Technologies |
| Ross Stores vs. Fundo Investimento Imobiliario | Ross Stores vs. LESTE FDO INV | Ross Stores vs. Fras le SA | Ross Stores vs. Western Digital |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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