Correlation Between Raytheon Technologies and Visa
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and Visa 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 Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies and Visa Inc, you can compare the effects of market volatilities on Raytheon Technologies and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Visa.
Diversification Opportunities for Raytheon Technologies and Visa
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Raytheon and Visa is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Visa go up and down completely randomly.
Pair Corralation between Raytheon Technologies and Visa
Assuming the 90 days trading horizon Raytheon Technologies is expected to generate 3.08 times less return on investment than Visa. In addition to that, Raytheon Technologies is 1.18 times more volatile than Visa Inc. It trades about 0.1 of its total potential returns per unit of risk. Visa Inc is currently generating about 0.36 per unit of volatility. If you would invest 8,438 in Visa Inc on September 1, 2024 and sell it today you would earn a total of 1,077 from holding Visa Inc or generate 12.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raytheon Technologies vs. Visa Inc
Performance |
| Timeline |
| Raytheon Technologies |
| Visa Inc |
Raytheon Technologies and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and Visa
The main advantage of trading using opposite Raytheon Technologies and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa'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 |
| Visa vs. Ameriprise Financial | Visa vs. BIONTECH SE DRN | Visa vs. HDFC Bank Limited | Visa 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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