Correlation Between Raytheon Technologies and SP Global
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and SP Global 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 SP Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies and SP Global, you can compare the effects of market volatilities on Raytheon Technologies and SP Global 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 SP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and SP Global.
Diversification Opportunities for Raytheon Technologies and SP Global
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Raytheon and SPGI34 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Global 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 SP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Global has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and SP Global go up and down completely randomly.
Pair Corralation between Raytheon Technologies and SP Global
Assuming the 90 days trading horizon Raytheon Technologies is expected to generate 1.2 times more return on investment than SP Global. However, Raytheon Technologies is 1.2 times more volatile than SP Global. It trades about 0.09 of its potential returns per unit of risk. SP Global is currently generating about 0.1 per unit of risk. If you would invest 7,571 in Raytheon Technologies on September 12, 2024 and sell it today you would earn a total of 4,299 from holding Raytheon Technologies or generate 56.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.94% |
| Values | Daily Returns |
Raytheon Technologies vs. SP Global
Performance |
| Timeline |
| Raytheon Technologies |
| SP Global |
Raytheon Technologies and SP Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and SP Global
The main advantage of trading using opposite Raytheon Technologies and SP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, SP Global 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 SP Global will offset losses from the drop in SP Global's 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 |
| SP Global vs. Unity Software | SP Global vs. Verizon Communications | SP Global vs. MAHLE Metal Leve | SP Global vs. Paycom Software |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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