Correlation Between Boeing and AXT
Can any of the company-specific risk be diversified away by investing in both Boeing and AXT 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 AXT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and AXT Inc, you can compare the effects of market volatilities on Boeing and AXT 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 AXT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and AXT.
Diversification Opportunities for Boeing and AXT
Very weak diversification
The 3 months correlation between Boeing and AXT is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc 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 AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of Boeing i.e., Boeing and AXT go up and down completely randomly.
Pair Corralation between Boeing and AXT
Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.44 times more return on investment than AXT. However, The Boeing is 2.26 times less risky than AXT. It trades about -0.01 of its potential returns per unit of risk. AXT Inc is currently generating about -0.24 per unit of risk. If you would invest 15,429 in The Boeing on August 31, 2024 and sell it today you would lose (189.00) from holding The Boeing or give up 1.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. AXT Inc
Performance |
| Timeline |
| Boeing |
| AXT Inc |
Boeing and AXT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and AXT
The main advantage of trading using opposite Boeing and AXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, AXT 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 AXT will offset losses from the drop in AXT's long position.| Boeing vs. Raytheon Technologies Corp | Boeing vs. Northrop Grumman | Boeing vs. General Dynamics | Boeing vs. L3Harris Technologies |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |