Correlation Between Boeing and Electronic Control
Can any of the company-specific risk be diversified away by investing in both Boeing and Electronic Control 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 Electronic Control into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Electronic Control Security, you can compare the effects of market volatilities on Boeing and Electronic Control 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 Electronic Control. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Electronic Control.
Diversification Opportunities for Boeing and Electronic Control
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boeing and Electronic is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Electronic Control Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Control 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 Electronic Control. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Control has no effect on the direction of Boeing i.e., Boeing and Electronic Control go up and down completely randomly.
Pair Corralation between Boeing and Electronic Control
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Electronic Control. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 60.96 times less risky than Electronic Control. The stock trades about -0.07 of its potential returns per unit of risk. The Electronic Control Security is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.45 in Electronic Control Security on August 27, 2024 and sell it today you would lose (0.39) from holding Electronic Control Security or give up 86.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Electronic Control Security
Performance |
| Timeline |
| Boeing |
| Electronic Control |
Boeing and Electronic Control Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Electronic Control
The main advantage of trading using opposite Boeing and Electronic Control positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Electronic Control 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 Electronic Control will offset losses from the drop in Electronic Control's long position.The idea behind The Boeing and Electronic Control Security 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.| Electronic Control vs. Boxlight Corp Class | Electronic Control vs. Siyata Mobile | Electronic Control vs. ClearOne | Electronic Control vs. HUMANA INC |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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