Correlation Between Textron and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Textron 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 Textron and Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Textron and Raytheon Technologies Corp, you can compare the effects of market volatilities on Textron 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 Textron with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Textron and Raytheon Technologies.
Diversification Opportunities for Textron and Raytheon Technologies
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Textron and Raytheon is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Textron and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Textron 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 Textron 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 Textron i.e., Textron and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Textron and Raytheon Technologies
Assuming the 90 days horizon Textron is expected to generate 25.34 times less return on investment than Raytheon Technologies. In addition to that, Textron is 1.11 times more volatile than Raytheon Technologies Corp. It trades about 0.0 of its total potential returns per unit of risk. Raytheon Technologies Corp is currently generating about 0.06 per unit of volatility. If you would invest 10,725 in Raytheon Technologies Corp on September 12, 2024 and sell it today you would earn a total of 507.00 from holding Raytheon Technologies Corp or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Textron vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Textron |
| Raytheon Technologies |
Textron and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Textron and Raytheon Technologies
The main advantage of trading using opposite Textron and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Textron 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.| Textron vs. Spirent Communications plc | Textron vs. Lion One Metals | Textron vs. Ribbon Communications | Textron vs. Consolidated Communications Holdings |
| Raytheon Technologies vs. JAPAN AIRLINES | Raytheon Technologies vs. Elmos Semiconductor SE | Raytheon Technologies vs. Singapore Airlines Limited | Raytheon Technologies vs. Marie Brizard Wine |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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