Correlation Between Raytheon Technologies and TJX Companies
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and TJX Companies 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 TJX Companies 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 TJX Companies, you can compare the effects of market volatilities on Raytheon Technologies and TJX Companies 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 TJX Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and TJX Companies.
Diversification Opportunities for Raytheon Technologies and TJX Companies
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Raytheon and TJX is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 TJX Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and TJX Companies go up and down completely randomly.
Pair Corralation between Raytheon Technologies and TJX Companies
Assuming the 90 days trading horizon Raytheon Technologies is expected to under-perform the TJX Companies. But the stock apears to be less risky and, when comparing its historical volatility, Raytheon Technologies is 1.27 times less risky than TJX Companies. The stock trades about -0.06 of its potential returns per unit of risk. The The TJX Companies is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 65,896 in The TJX Companies on September 12, 2024 and sell it today you would earn a total of 10,647 from holding The TJX Companies or generate 16.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raytheon Technologies vs. The TJX Companies
Performance |
| Timeline |
| Raytheon Technologies |
| TJX Companies |
Raytheon Technologies and TJX Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and TJX Companies
The main advantage of trading using opposite Raytheon Technologies and TJX Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, TJX Companies 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 TJX Companies will offset losses from the drop in TJX Companies' 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 |
| TJX Companies vs. Marvell Technology | TJX Companies vs. Technos SA | TJX Companies vs. Raytheon Technologies | TJX Companies vs. Charter Communications |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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