Correlation Between Triumph and Textron
Can any of the company-specific risk be diversified away by investing in both Triumph and Textron 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 Triumph and Textron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triumph Group and Textron, you can compare the effects of market volatilities on Triumph and Textron 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 Triumph with a short position of Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triumph and Textron.
Diversification Opportunities for Triumph and Textron
Very good diversification
The 3 months correlation between Triumph and Textron is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Group and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron and Triumph 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 Triumph Group are associated (or correlated) with Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of Triumph i.e., Triumph and Textron go up and down completely randomly.
Pair Corralation between Triumph and Textron
Considering the 90-day investment horizon Triumph Group is expected to generate 2.41 times more return on investment than Textron. However, Triumph is 2.41 times more volatile than Textron. It trades about 0.28 of its potential returns per unit of risk. Textron is currently generating about 0.08 per unit of risk. If you would invest 1,490 in Triumph Group on August 28, 2024 and sell it today you would earn a total of 405.00 from holding Triumph Group or generate 27.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Triumph Group vs. Textron
Performance |
| Timeline |
| Triumph Group |
| Textron |
Triumph and Textron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triumph and Textron
The main advantage of trading using opposite Triumph and Textron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triumph position performs unexpectedly, Textron 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 Textron will offset losses from the drop in Textron's long position.| Triumph vs. Mercury Systems | Triumph vs. Curtiss Wright | Triumph vs. Hexcel | Triumph vs. Ducommun Incorporated |
| Textron vs. Hexcel | Textron vs. Huntington Ingalls Industries | Textron vs. Curtiss Wright | Textron vs. Mercury Systems |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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