Correlation Between Boeing and AAR Corp
Can any of the company-specific risk be diversified away by investing in both Boeing and AAR Corp 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 Boeing and AAR Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boeing Co and AAR Corp, you can compare the effects of market volatilities on Boeing and AAR Corp 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 Boeing with a short position of AAR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and AAR Corp.
Diversification Opportunities for Boeing and AAR Corp
Very good diversification
The 3 months correlation between Boeing and AAR is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Boeing Co and AAR Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAR Corp and Boeing 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 Boeing Co are associated (or correlated) with AAR Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAR Corp has no effect on the direction of Boeing i.e., Boeing and AAR Corp go up and down completely randomly.
Pair Corralation between Boeing and AAR Corp
Assuming the 90 days horizon Boeing is expected to generate 1.4 times less return on investment than AAR Corp. But when comparing it to its historical volatility, Boeing Co is 1.61 times less risky than AAR Corp. It trades about 0.14 of its potential returns per unit of risk. AAR Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,840 in AAR Corp on November 1, 2024 and sell it today you would earn a total of 1,044 from holding AAR Corp or generate 17.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boeing Co vs. AAR Corp
Performance |
| Timeline |
| Boeing |
| AAR Corp |
Boeing and AAR Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and AAR Corp
The main advantage of trading using opposite Boeing and AAR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, AAR Corp 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 AAR Corp will offset losses from the drop in AAR Corp's long position.The idea behind Boeing Co and AAR Corp 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.| AAR Corp vs. Sidus Space | AAR Corp vs. Planet Labs PBC | AAR Corp vs. Intuitive Machines | AAR Corp vs. Rocket Lab USA |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |