Correlation Between Boeing and Xiaomi
Can any of the company-specific risk be diversified away by investing in both Boeing and Xiaomi 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 Xiaomi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Xiaomi, you can compare the effects of market volatilities on Boeing and Xiaomi 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 Xiaomi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Xiaomi.
Diversification Opportunities for Boeing and Xiaomi
Excellent diversification
The 3 months correlation between Boeing and Xiaomi is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Xiaomi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiaomi 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 The Boeing are associated (or correlated) with Xiaomi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiaomi has no effect on the direction of Boeing i.e., Boeing and Xiaomi go up and down completely randomly.
Pair Corralation between Boeing and Xiaomi
Assuming the 90 days horizon The Boeing is expected to generate 0.62 times more return on investment than Xiaomi. However, The Boeing is 1.6 times less risky than Xiaomi. It trades about 0.14 of its potential returns per unit of risk. Xiaomi is currently generating about 0.04 per unit of risk. If you would invest 299,200 in The Boeing on September 1, 2024 and sell it today you would earn a total of 18,800 from holding The Boeing or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Xiaomi
Performance |
| Timeline |
| Boeing |
| Xiaomi |
Boeing and Xiaomi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Xiaomi
The main advantage of trading using opposite Boeing and Xiaomi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Xiaomi 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 Xiaomi will offset losses from the drop in Xiaomi's long position.| Boeing vs. Micron Technology | Boeing vs. United States Steel | Boeing vs. GMxico Transportes SAB | Boeing vs. Genworth Financial |
| Xiaomi vs. Monster Beverage Corp | Xiaomi vs. KB Home | Xiaomi vs. GMxico Transportes SAB | Xiaomi vs. Cognizant Technology Solutions |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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