Correlation Between L3Harris Technologies and Air Industries

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Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies and Air Industries 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 L3Harris Technologies and Air Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L3Harris Technologies and Air Industries Group, you can compare the effects of market volatilities on L3Harris Technologies and Air Industries 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 L3Harris Technologies with a short position of Air Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and Air Industries.

Diversification Opportunities for L3Harris Technologies and Air Industries

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between L3Harris and Air Industries is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and Air Industries Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Industries Group and L3Harris 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 L3Harris Technologies are associated (or correlated) with Air Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Industries Group has no effect on the direction of L3Harris Technologies i.e., L3Harris Technologies and Air Industries go up and down completely randomly.

Pair Corralation between L3Harris Technologies and Air Industries

Considering the 90-day investment horizon L3Harris Technologies is expected to generate 0.41 times more return on investment than Air Industries. However, L3Harris Technologies is 2.47 times less risky than Air Industries. It trades about 0.05 of its potential returns per unit of risk. Air Industries Group is currently generating about -0.01 per unit of risk. If you would invest  17,276  in L3Harris Technologies on May 18, 2022 and sell it today you would earn a total of  6,657  from holding L3Harris Technologies or generate 38.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

L3Harris Technologies  vs.  Air Industries Group

 Performance (%) 
       Timeline  
L3Harris Technologies 
L3Harris Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in L3Harris Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, L3Harris Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

L3Harris Price Channel

Air Industries Group 
Air Industries Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Air Industries Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Air Industries may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Air Industries Price Channel

L3Harris Technologies and Air Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with L3Harris Technologies and Air Industries

The main advantage of trading using opposite L3Harris Technologies and Air Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies position performs unexpectedly, Air Industries 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 Air Industries will offset losses from the drop in Air Industries' long position.
The idea behind L3Harris Technologies and Air Industries Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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