Correlation Between Virgin Galactic and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Virgin Galactic 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 Virgin Galactic and Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virgin Galactic Holdings and Raytheon Technologies Corp, you can compare the effects of market volatilities on Virgin Galactic 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 Virgin Galactic with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Galactic and Raytheon Technologies.
Diversification Opportunities for Virgin Galactic and Raytheon Technologies
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Virgin and Raytheon is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Galactic Holdings and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Virgin Galactic 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 Virgin Galactic Holdings 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 Virgin Galactic i.e., Virgin Galactic and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Virgin Galactic and Raytheon Technologies
Given the investment horizon of 90 days Virgin Galactic Holdings is expected to generate 4.62 times more return on investment than Raytheon Technologies. However, Virgin Galactic is 4.62 times more volatile than Raytheon Technologies Corp. It trades about 0.0 of its potential returns per unit of risk. Raytheon Technologies Corp is currently generating about -0.04 per unit of risk. If you would invest 735.00 in Virgin Galactic Holdings on August 30, 2024 and sell it today you would lose (32.00) from holding Virgin Galactic Holdings or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Galactic Holdings vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Virgin Galactic Holdings |
| Raytheon Technologies |
Virgin Galactic and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Galactic and Raytheon Technologies
The main advantage of trading using opposite Virgin Galactic and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Galactic 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.| Virgin Galactic vs. Planet Labs PBC | Virgin Galactic vs. Eve Holding | Virgin Galactic vs. Redwire Corp | Virgin Galactic vs. Lockheed Martin |
| Raytheon Technologies vs. Northrop Grumman | Raytheon Technologies vs. General Dynamics | Raytheon Technologies vs. The Boeing | Raytheon Technologies vs. L3Harris 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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