Correlation Between Boeing and Bel Fuse
Can any of the company-specific risk be diversified away by investing in both Boeing and Bel Fuse 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 Bel Fuse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Bel Fuse B, you can compare the effects of market volatilities on Boeing and Bel Fuse 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 Bel Fuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Bel Fuse.
Diversification Opportunities for Boeing and Bel Fuse
Excellent diversification
The 3 months correlation between Boeing and Bel is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Bel Fuse B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse B 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 Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse B has no effect on the direction of Boeing i.e., Boeing and Bel Fuse go up and down completely randomly.
Pair Corralation between Boeing and Bel Fuse
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Bel Fuse. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 1.36 times less risky than Bel Fuse. The stock trades about -0.07 of its potential returns per unit of risk. The Bel Fuse B is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6,482 in Bel Fuse B on August 28, 2024 and sell it today you would earn a total of 1,593 from holding Bel Fuse B or generate 24.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Bel Fuse B
Performance |
| Timeline |
| Boeing |
| Bel Fuse B |
Boeing and Bel Fuse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Bel Fuse
The main advantage of trading using opposite Boeing and Bel Fuse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Bel Fuse 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 Bel Fuse will offset losses from the drop in Bel Fuse's long position.The idea behind The Boeing and Bel Fuse B 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.| Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Methode Electronics | Bel Fuse vs. Richardson Electronics | Bel Fuse vs. Plexus Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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