Correlation Between Universal and Raytheon Technologies

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

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

Diversification Opportunities for Universal and Raytheon Technologies

0.0

Correlation Coefficient

Universal  Raytheon Technologies

Pay attention - limited upside

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

Pair Corralation between Universal and Raytheon Technologies

If you would invest  4,792  in Universal on February 5, 2024 and sell it today you would earn a total of  547.00  from holding Universal or generate 11.41% return on investment over 90 days.

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

Universal  vs.  Raytheon Technologies

Universal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Universal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Universal and Raytheon Technologies

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

The idea behind Universal and Raytheon 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.