Correlation Between FDO INV and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both FDO INV 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 FDO INV and Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FDO INV Imob and Raytheon Technologies, you can compare the effects of market volatilities on FDO INV 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 FDO INV with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of FDO INV and Raytheon Technologies.
Diversification Opportunities for FDO INV and Raytheon Technologies
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FDO and Raytheon is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding FDO INV Imob and Raytheon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and FDO INV 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 FDO INV Imob 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 FDO INV i.e., FDO INV and Raytheon Technologies go up and down completely randomly.
Pair Corralation between FDO INV and Raytheon Technologies
Assuming the 90 days trading horizon FDO INV is expected to generate 2.15 times less return on investment than Raytheon Technologies. In addition to that, FDO INV is 1.09 times more volatile than Raytheon Technologies. It trades about 0.02 of its total potential returns per unit of risk. Raytheon Technologies is currently generating about 0.05 per unit of volatility. If you would invest 8,488 in Raytheon Technologies on August 23, 2024 and sell it today you would earn a total of 3,179 from holding Raytheon Technologies or generate 37.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.78% |
| Values | Daily Returns |
FDO INV Imob vs. Raytheon Technologies
Performance |
| Timeline |
| FDO INV Imob |
| Raytheon Technologies |
FDO INV and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FDO INV and Raytheon Technologies
The main advantage of trading using opposite FDO INV and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FDO INV 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.The idea behind FDO INV Imob and Raytheon Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Raytheon Technologies vs. The Boeing | Raytheon Technologies vs. Lockheed Martin | Raytheon Technologies vs. Northrop Grumman |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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