Correlation Between Boeing and Connecticut Light
Can any of the company-specific risk be diversified away by investing in both Boeing and Connecticut Light 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 Connecticut Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and The Connecticut Light, you can compare the effects of market volatilities on Boeing and Connecticut Light 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 Connecticut Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Connecticut Light.
Diversification Opportunities for Boeing and Connecticut Light
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boeing and Connecticut is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and The Connecticut Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connecticut Light 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 Connecticut Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connecticut Light has no effect on the direction of Boeing i.e., Boeing and Connecticut Light go up and down completely randomly.
Pair Corralation between Boeing and Connecticut Light
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Connecticut Light. In addition to that, Boeing is 1.37 times more volatile than The Connecticut Light. It trades about -0.05 of its total potential returns per unit of risk. The Connecticut Light is currently generating about 0.04 per unit of volatility. If you would invest 3,100 in The Connecticut Light on September 1, 2024 and sell it today you would earn a total of 223.00 from holding The Connecticut Light or generate 7.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
The Boeing vs. The Connecticut Light
Performance |
| Timeline |
| Boeing |
| Connecticut Light |
Boeing and Connecticut Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Connecticut Light
The main advantage of trading using opposite Boeing and Connecticut Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Connecticut Light 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 Connecticut Light will offset losses from the drop in Connecticut Light's long position.| Boeing vs. Raytheon Technologies Corp | Boeing vs. Northrop Grumman | Boeing vs. General Dynamics | Boeing vs. L3Harris Technologies |
| Connecticut Light vs. Southern Company | Connecticut Light vs. Duke Energy | Connecticut Light vs. Duke Energy | Connecticut Light vs. National Grid PLC |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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