Correlation Between MICT and Northrop Grumman

Can any of the company-specific risk be diversified away by investing in both MICT and Northrop Grumman 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 MICT and Northrop Grumman into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MICT Inc and Northrop Grumman, you can compare the effects of market volatilities on MICT and Northrop Grumman 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 MICT with a short position of Northrop Grumman. Check out your portfolio center. Please also check ongoing floating volatility patterns of MICT and Northrop Grumman.

Diversification Opportunities for MICT and Northrop Grumman

0.03

Correlation Coefficient

MICT  Northrop Grumman

Significant diversification

The 3 months correlation between MICT and Northrop is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding MICT Inc and Northrop Grumman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northrop Grumman and MICT 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 MICT Inc are associated (or correlated) with Northrop Grumman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northrop Grumman has no effect on the direction of MICT i.e., MICT and Northrop Grumman go up and down completely randomly.

Pair Corralation between MICT and Northrop Grumman

If you would invest  44,413  in Northrop Grumman on January 24, 2024 and sell it today you would earn a total of  2,685  from holding Northrop Grumman or generate 6.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.54%
Values	Daily Returns

MICT Inc  vs.  Northrop Grumman

MICT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MICT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, MICT is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Northrop Grumman

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Northrop Grumman are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Northrop Grumman is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MICT and Northrop Grumman

The main advantage of trading using opposite MICT and Northrop Grumman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MICT position performs unexpectedly, Northrop Grumman 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 Northrop Grumman will offset losses from the drop in Northrop Grumman's long position.

The idea behind MICT Inc and Northrop Grumman 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.