Correlation Between Raytheon Technologies and Allpark Empreendimentos

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

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

Diversification Opportunities for Raytheon Technologies and Allpark Empreendimentos

-0.39

Correlation Coefficient

Raytheon Technologies  Allpark Empreendimentos

Very good diversification

The 3 months correlation between Raytheon and Allpark is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and Allpark Empreendimentos Partic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allpark Empreendimentos 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 Allpark Empreendimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allpark Empreendimentos has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Allpark Empreendimentos go up and down completely randomly.

Pair Corralation between Raytheon Technologies and Allpark Empreendimentos

Assuming the 90 days trading horizon Raytheon Technologies is expected to generate 0.43 times more return on investment than Allpark Empreendimentos. However, Raytheon Technologies is 2.31 times less risky than Allpark Empreendimentos. It trades about 0.13 of its potential returns per unit of risk. Allpark Empreendimentos Participaes is currently generating about 0.01 per unit of risk. If you would invest  9,498  in Raytheon Technologies on September 3, 2024 and sell it today you would earn a total of  2,622  from holding Raytheon Technologies or generate 27.61% return on investment over 90 days.

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

Raytheon Technologies  vs.  Allpark Empreendimentos Partic

Raytheon Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Raytheon Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Raytheon Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Allpark Empreendimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allpark Empreendimentos Participaes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Raytheon Technologies and Allpark Empreendimentos

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

The idea behind Raytheon Technologies and Allpark Empreendimentos Participaes 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.