Correlation Between Boeing and CPI Aerostructures
Can any of the company-specific risk be diversified away by investing in both Boeing and CPI Aerostructures 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 CPI Aerostructures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and CPI Aerostructures, you can compare the effects of market volatilities on Boeing and CPI Aerostructures 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 CPI Aerostructures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and CPI Aerostructures.
Diversification Opportunities for Boeing and CPI Aerostructures
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boeing and CPI is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and CPI Aerostructures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Aerostructures 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 CPI Aerostructures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPI Aerostructures has no effect on the direction of Boeing i.e., Boeing and CPI Aerostructures go up and down completely randomly.
Pair Corralation between Boeing and CPI Aerostructures
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the CPI Aerostructures. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 1.3 times less risky than CPI Aerostructures. The stock trades about -0.07 of its potential returns per unit of risk. The CPI Aerostructures is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 236.00 in CPI Aerostructures on August 26, 2024 and sell it today you would earn a total of 138.00 from holding CPI Aerostructures or generate 58.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. CPI Aerostructures
Performance |
| Timeline |
| Boeing |
| CPI Aerostructures |
Boeing and CPI Aerostructures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and CPI Aerostructures
The main advantage of trading using opposite Boeing and CPI Aerostructures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, CPI Aerostructures 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 CPI Aerostructures will offset losses from the drop in CPI Aerostructures' long position.The idea behind The Boeing and CPI Aerostructures 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.| CPI Aerostructures vs. Redwire Corp | CPI Aerostructures vs. Sidus Space | CPI Aerostructures vs. Rocket Lab USA | CPI Aerostructures vs. Momentus |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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