Correlation Between Raytheon Technologies and Momentus

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

Diversification Opportunities for Raytheon Technologies and Momentus

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Raytheon and Momentus is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and Momentus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Momentus 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 Corp are associated (or correlated) with Momentus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Momentus has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Momentus go up and down completely randomly.

Pair Corralation between Raytheon Technologies and Momentus

Considering the 90-day investment horizon Raytheon Technologies Corp is expected to generate 0.24 times more return on investment than Momentus. However, Raytheon Technologies Corp is 4.11 times less risky than Momentus. It trades about 0.05 of its potential returns per unit of risk. Momentus is currently generating about -0.06 per unit of risk. If you would invest  6,962  in Raytheon Technologies Corp on September 1, 2022 and sell it today you would earn a total of  2,781  from holding Raytheon Technologies Corp or generate 39.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Raytheon Technologies Corp  vs.  Momentus

 Performance (%) 
       Timeline  
Raytheon Technologies 
Raytheon Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Raytheon Technologies Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Raytheon Technologies may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Raytheon Price Channel

Momentus 
Momentus Performance
0 of 100
Over the last 90 days Momentus has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Momentus Price Channel

Raytheon Technologies and Momentus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Raytheon Technologies and Momentus

The main advantage of trading using opposite Raytheon Technologies and Momentus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Momentus 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 Momentus will offset losses from the drop in Momentus' long position.
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The idea behind Raytheon Technologies Corp and Momentus 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.
Momentus vs. Lockheed Martin Corp
Momentus vs. Boeing Company
Momentus vs. Northrop Grumman Corp
Momentus vs. General Dynamics Corp
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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