Correlation Between L3Harris Technologies and Intuitive Machines

Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies and Intuitive Machines 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 Intuitive Machines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between L3Harris Technologies and Intuitive Machines, you can compare the effects of market volatilities on L3Harris Technologies and Intuitive Machines 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 Intuitive Machines. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and Intuitive Machines.

Diversification Opportunities for L3Harris Technologies and Intuitive Machines

0.71

Correlation Coefficient

L3Harris Technologies  Intuitive Machines

Poor diversification

The 3 months correlation between L3Harris and Intuitive is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and Intuitive Machines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Machines 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 Intuitive Machines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Machines has no effect on the direction of L3Harris Technologies i.e., L3Harris Technologies and Intuitive Machines go up and down completely randomly.

Pair Corralation between L3Harris Technologies and Intuitive Machines

Considering the 90-day investment horizon L3Harris Technologies is expected to generate 9.16 times less return on investment than Intuitive Machines. But when comparing it to its historical volatility, L3Harris Technologies is 5.84 times less risky than Intuitive Machines. It trades about 0.09 of its potential returns per unit of risk. Intuitive Machines is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  512.00  in Intuitive Machines on August 24, 2024 and sell it today you would earn a total of  888.00  from holding Intuitive Machines or generate 173.44% return on investment over 90 days.

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

L3Harris Technologies  vs.  Intuitive Machines

L3Harris Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in L3Harris Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical indicators, L3Harris Technologies may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Intuitive Machines

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Machines are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Intuitive Machines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with L3Harris Technologies and Intuitive Machines

The main advantage of trading using opposite L3Harris Technologies and Intuitive Machines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies position performs unexpectedly, Intuitive Machines 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 Intuitive Machines will offset losses from the drop in Intuitive Machines' long position.

The idea behind L3Harris Technologies and Intuitive Machines 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.