Correlation Between Boeing and BWX Technologies
Can any of the company-specific risk be diversified away by investing in both Boeing and BWX Technologies 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 BWX Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and BWX Technologies, you can compare the effects of market volatilities on Boeing and BWX Technologies 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 BWX Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and BWX Technologies.
Diversification Opportunities for Boeing and BWX Technologies
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boeing and BWX is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and BWX Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BWX Technologies 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 BWX Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BWX Technologies has no effect on the direction of Boeing i.e., Boeing and BWX Technologies go up and down completely randomly.
Pair Corralation between Boeing and BWX Technologies
Allowing for the 90-day total investment horizon Boeing is expected to generate 2.88 times less return on investment than BWX Technologies. In addition to that, Boeing is 1.09 times more volatile than BWX Technologies. It trades about 0.04 of its total potential returns per unit of risk. BWX Technologies is currently generating about 0.13 per unit of volatility. If you would invest 12,352 in BWX Technologies on August 28, 2024 and sell it today you would earn a total of 687.00 from holding BWX Technologies or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Boeing vs. BWX Technologies
Performance |
| Timeline |
| Boeing |
| BWX Technologies |
Boeing and BWX Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and BWX Technologies
The main advantage of trading using opposite Boeing and BWX Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, BWX Technologies 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 BWX Technologies will offset losses from the drop in BWX Technologies' long position.The idea behind The Boeing and BWX Technologies 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.| BWX Technologies vs. Hexcel | BWX Technologies vs. Ducommun Incorporated | BWX Technologies vs. Mercury Systems | BWX Technologies vs. Woodward |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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