Correlation Between Raytheon Technologies and Transamerica International

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

By analyzing existing cross correlation between Raytheon Technologies and Transamerica International Small, you can compare the effects of market volatilities on Raytheon Technologies and Transamerica International 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 Raytheon Technologies with a short position of Transamerica International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Transamerica International.

Diversification Opportunities for Raytheon Technologies and Transamerica International

0.0

Correlation Coefficient

Raytheon Technologies  Transamerica International

Pay attention - limited upside

The 3 months correlation between Raytheon and Transamerica is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and Transamerica International Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica International and Raytheon Technologies 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 Raytheon Technologies are associated (or correlated) with Transamerica International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica International has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Transamerica International go up and down completely randomly.

Pair Corralation between Raytheon Technologies and Transamerica International

If you would invest (100.00) in Raytheon Technologies on January 20, 2024 and sell it today you would earn a total of  100.00  from holding Raytheon Technologies or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Raytheon Technologies  vs.  Transamerica International Sma

Raytheon Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raytheon Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Raytheon Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Transamerica International

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica International Small are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Transamerica International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Raytheon Technologies and Transamerica International

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

The idea behind Raytheon Technologies and Transamerica International Small 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.