Correlation Between Safran SA and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Safran SA and Raytheon Technologies 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 Safran SA and Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safran SA and Raytheon Technologies Corp, you can compare the effects of market volatilities on Safran SA and Raytheon Technologies 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 Safran SA with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safran SA and Raytheon Technologies.
Diversification Opportunities for Safran SA and Raytheon Technologies
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Safran and Raytheon is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Safran SA 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 Safran SA are associated (or correlated) with Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Safran SA i.e., Safran SA and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Safran SA and Raytheon Technologies
Assuming the 90 days horizon Safran SA is expected to generate 1.45 times less return on investment than Raytheon Technologies. In addition to that, Safran SA is 1.19 times more volatile than Raytheon Technologies Corp. It trades about 0.09 of its total potential returns per unit of risk. Raytheon Technologies Corp is currently generating about 0.16 per unit of volatility. If you would invest 7,945 in Raytheon Technologies Corp on September 3, 2024 and sell it today you would earn a total of 4,238 from holding Raytheon Technologies Corp or generate 53.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safran SA vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Safran SA |
| Raytheon Technologies |
Safran SA and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safran SA and Raytheon Technologies
The main advantage of trading using opposite Safran SA and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safran SA position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' long position.| Safran SA vs. Airbus Group NV | Safran SA vs. Moog Inc | Safran SA vs. BAE Systems PLC | Safran SA vs. Airbus Group SE |
| Raytheon Technologies vs. Highway Holdings Limited | Raytheon Technologies vs. QCR Holdings | Raytheon Technologies vs. Partner Communications | Raytheon Technologies vs. Acumen Pharmaceuticals |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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