Correlation Between Northrop Grumman and A2Z SMART

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Can any of the company-specific risk be diversified away by investing in both Northrop Grumman and A2Z SMART 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 Northrop Grumman and A2Z SMART into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northrop Grumman Corp and A2Z SMART TECHNOLOGIES, you can compare the effects of market volatilities on Northrop Grumman and A2Z SMART 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 Northrop Grumman with a short position of A2Z SMART. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northrop Grumman and A2Z SMART.

Diversification Opportunities for Northrop Grumman and A2Z SMART

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Northrop and AAZZF is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Northrop Grumman Corp and A2Z SMART TECHNOLOGIES CORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A2Z SMART TECHNOLOGIES and Northrop Grumman 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 Northrop Grumman Corp are associated (or correlated) with A2Z SMART. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A2Z SMART TECHNOLOGIES has no effect on the direction of Northrop Grumman i.e., Northrop Grumman and A2Z SMART go up and down completely randomly.

Pair Corralation between Northrop Grumman and A2Z SMART

If you would invest  44,902  in Northrop Grumman Corp on May 17, 2022 and sell it today you would earn a total of  3,056  from holding Northrop Grumman Corp or generate 6.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy2.44%
ValuesDaily Returns

Northrop Grumman Corp  vs.  A2Z SMART TECHNOLOGIES CORP

 Performance (%) 
       Timeline  
Northrop Grumman Corp 
Northrop Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Northrop Grumman Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Northrop Grumman is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Northrop Price Channel

A2Z SMART TECHNOLOGIES 
AAZZF Performance
0 of 100
Over the last 90 days A2Z SMART TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, A2Z SMART is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Northrop Grumman and A2Z SMART Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Northrop Grumman and A2Z SMART

The main advantage of trading using opposite Northrop Grumman and A2Z SMART positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northrop Grumman position performs unexpectedly, A2Z SMART 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 A2Z SMART will offset losses from the drop in A2Z SMART's long position.
The idea behind Northrop Grumman Corp and A2Z SMART 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.

A2Z SMART TECHNOLOGIES

Pair trading matchups for A2Z SMART

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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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