Correlation Between Northrop Grumman and O I

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

By analyzing existing cross correlation between Northrop Grumman and O I Glass, you can compare the effects of market volatilities on Northrop Grumman and O I 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 O I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northrop Grumman and O I.

Diversification Opportunities for Northrop Grumman and O I

0.14

Correlation Coefficient

Northrop Grumman  O I

Average diversification

The 3 months correlation between Northrop and O I is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Northrop Grumman and O I Glass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on O I Glass 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 are associated (or correlated) with O I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of O I Glass has no effect on the direction of Northrop Grumman i.e., Northrop Grumman and O I go up and down completely randomly.

Pair Corralation between Northrop Grumman and O I

Considering the 90-day investment horizon Northrop Grumman is expected to generate 2.43 times less return on investment than O I. But when comparing it to its historical volatility, Northrop Grumman is 1.71 times less risky than O I. It trades about 0.01 of its potential returns per unit of risk. O I Glass is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,374  in O I Glass on January 24, 2024 and sell it today you would earn a total of  107.00  from holding O I Glass or generate 7.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Northrop Grumman  vs.  O I Glass

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.

O I Glass

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in O I Glass are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, O I is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Northrop Grumman and O I

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

The idea behind Northrop Grumman and O I Glass 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.