Correlation Between Momentus and Northrop Grumman

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

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

Diversification Opportunities for Momentus and Northrop Grumman

-0.73

Correlation Coefficient

Momentus  Northrop Grumman

Pay attention - limited upside

The 3 months correlation between Momentus and Northrop is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Momentus and Northrop Grumman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northrop Grumman and Momentus 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 Momentus are associated (or correlated) with Northrop Grumman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northrop Grumman has no effect on the direction of Momentus i.e., Momentus and Northrop Grumman go up and down completely randomly.

Pair Corralation between Momentus and Northrop Grumman

Given the investment horizon of 90 days Momentus is expected to under-perform the Northrop Grumman. In addition to that, Momentus is 2.52 times more volatile than Northrop Grumman. It trades about -0.13 of its total potential returns per unit of risk. Northrop Grumman is currently generating about 0.2 per unit of volatility. If you would invest  48,372  in Northrop Grumman on May 7, 2025 and sell it today you would earn a total of  10,623  from holding Northrop Grumman or generate 21.96% return on investment over 90 days.

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

Momentus  vs.  Northrop Grumman

Momentus

Risk-Adjusted Performance

Weakest

Over the last 90 days Momentus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Northrop Grumman

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northrop Grumman are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Northrop Grumman exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Momentus and Northrop Grumman

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

The idea behind Momentus and Northrop Grumman 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 Commodity Directory module to find actively traded commodities issued by global exchanges.