Correlation Between Boeing and Now
Can any of the company-specific risk be diversified away by investing in both Boeing and Now 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 Now into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Now Inc, you can compare the effects of market volatilities on Boeing and Now 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 Now. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Now.
Diversification Opportunities for Boeing and Now
Very good diversification
The 3 months correlation between Boeing and Now is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc 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 Now. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Inc has no effect on the direction of Boeing i.e., Boeing and Now go up and down completely randomly.
Pair Corralation between Boeing and Now
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Now. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 1.19 times less risky than Now. The stock trades about -0.07 of its potential returns per unit of risk. The Now Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,019 in Now Inc on August 27, 2024 and sell it today you would earn a total of 476.00 from holding Now Inc or generate 46.71% 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. Now Inc
Performance |
| Timeline |
| Boeing |
| Now Inc |
Boeing and Now Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Now
The main advantage of trading using opposite Boeing and Now positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Now 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 Now will offset losses from the drop in Now's long position.The idea behind The Boeing and Now Inc 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.| Now vs. Global Industrial Co | Now vs. BlueLinx Holdings | Now vs. WESCO International | Now vs. MSC Industrial Direct |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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