Correlation Between Northrop Grumman and Revlon
Can any of the company-specific risk be diversified away by investing in both Northrop Grumman and Revlon 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 Revlon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northrop Grumman and Revlon Inc, you can compare the effects of market volatilities on Northrop Grumman and Revlon 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 Revlon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northrop Grumman and Revlon.
Diversification Opportunities for Northrop Grumman and Revlon
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Northrop and Revlon is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Northrop Grumman and Revlon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revlon Inc 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 Revlon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revlon Inc has no effect on the direction of Northrop Grumman i.e., Northrop Grumman and Revlon go up and down completely randomly.
Pair Corralation between Northrop Grumman and Revlon
If you would invest 39.00 in Revlon Inc on January 19, 2024 and sell it today you would earn a total of 0.00 from holding Revlon Inc or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 0.81% |
Values | Daily Returns |
Northrop Grumman vs. Revlon Inc
Performance |
Timeline |
Northrop Grumman |
Revlon Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Northrop Grumman and Revlon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Northrop Grumman and Revlon
The main advantage of trading using opposite Northrop Grumman and Revlon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northrop Grumman position performs unexpectedly, Revlon 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 Revlon will offset losses from the drop in Revlon's long position.Northrop Grumman vs. Curtiss Wright | Northrop Grumman vs. Hexcel | Northrop Grumman vs. Kaman | Northrop Grumman vs. Ducommun Incorporated |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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