Correlation Between Textron and Huntington Ingalls

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

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

Diversification Opportunities for Textron and Huntington Ingalls

0.62

Correlation Coefficient

Textron  Huntington Ingalls

Poor diversification

The 3 months correlation between Textron and Huntington is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Textron and Huntington Ingalls Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Ingalls and Textron 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 Textron are associated (or correlated) with Huntington Ingalls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Ingalls has no effect on the direction of Textron i.e., Textron and Huntington Ingalls go up and down completely randomly.

Pair Corralation between Textron and Huntington Ingalls

Considering the 90-day investment horizon Textron is expected to generate 11.89 times less return on investment than Huntington Ingalls. But when comparing it to its historical volatility, Textron is 1.21 times less risky than Huntington Ingalls. It trades about 0.02 of its potential returns per unit of risk. Huntington Ingalls Industries is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  22,437  in Huntington Ingalls Industries on May 13, 2025 and sell it today you would earn a total of  4,032  from holding Huntington Ingalls Industries or generate 17.97% return on investment over 90 days.

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

Textron  vs.  Huntington Ingalls Industries

Textron

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Textron are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Textron is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Huntington Ingalls

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Ingalls Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Huntington Ingalls demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Textron and Huntington Ingalls

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

The idea behind Textron and Huntington Ingalls Industries 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.