Correlation Between Boeing and Compass Group
Can any of the company-specific risk be diversified away by investing in both Boeing and Compass Group 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 Compass Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Compass Group PLC, you can compare the effects of market volatilities on Boeing and Compass Group 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 Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Compass Group.
Diversification Opportunities for Boeing and Compass Group
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boeing and Compass is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Compass Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Group PLC 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 Compass Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Group PLC has no effect on the direction of Boeing i.e., Boeing and Compass Group go up and down completely randomly.
Pair Corralation between Boeing and Compass Group
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Compass Group. In addition to that, Boeing is 1.09 times more volatile than Compass Group PLC. It trades about -0.01 of its total potential returns per unit of risk. Compass Group PLC is currently generating about 0.06 per unit of volatility. If you would invest 2,231 in Compass Group PLC on August 24, 2024 and sell it today you would earn a total of 1,136 from holding Compass Group PLC or generate 50.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 89.11% |
| Values | Daily Returns |
The Boeing vs. Compass Group PLC
Performance |
| Timeline |
| Boeing |
| Compass Group PLC |
Boeing and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Compass Group
The main advantage of trading using opposite Boeing and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Compass Group 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 Compass Group will offset losses from the drop in Compass Group's long position.| Boeing vs. Coca Cola Consolidated | Boeing vs. Koppers Holdings | Boeing vs. Coca Cola Femsa SAB | Boeing vs. Know Labs |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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