Correlation Between Boeing and California Resources
Can any of the company-specific risk be diversified away by investing in both Boeing and California Resources 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 California Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and California Resources, you can compare the effects of market volatilities on Boeing and California Resources 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 California Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and California Resources.
Diversification Opportunities for Boeing and California Resources
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boeing and California is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and California Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Resources 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 California Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Resources has no effect on the direction of Boeing i.e., Boeing and California Resources go up and down completely randomly.
Pair Corralation between Boeing and California Resources
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the California Resources. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 3.46 times less risky than California Resources. The stock trades about -0.02 of its potential returns per unit of risk. The California Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,470 in California Resources on September 2, 2024 and sell it today you would earn a total of 242.00 from holding California Resources or generate 16.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 60.94% |
| Values | Daily Returns |
The Boeing vs. California Resources
Performance |
| Timeline |
| Boeing |
| California Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Boeing and California Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and California Resources
The main advantage of trading using opposite Boeing and California Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, California Resources 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 California Resources will offset losses from the drop in California Resources' long position.The idea behind The Boeing and California Resources 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.| California Resources vs. Cardinal Energy | California Resources vs. Spartan Delta Corp | California Resources vs. Delek Group | California Resources vs. Bonterra Energy 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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