Correlation Between Boeing and FLJ
Can any of the company-specific risk be diversified away by investing in both Boeing and FLJ 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 FLJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and FLJ Group, you can compare the effects of market volatilities on Boeing and FLJ 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 FLJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and FLJ.
Diversification Opportunities for Boeing and FLJ
Excellent diversification
The 3 months correlation between Boeing and FLJ is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and FLJ Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLJ Group 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 FLJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLJ Group has no effect on the direction of Boeing i.e., Boeing and FLJ go up and down completely randomly.
Pair Corralation between Boeing and FLJ
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the FLJ. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 8.72 times less risky than FLJ. The stock trades about -0.04 of its potential returns per unit of risk. The FLJ Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,276 in FLJ Group on August 28, 2024 and sell it today you would lose (1,157) from holding FLJ Group or give up 90.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 77.4% |
| Values | Daily Returns |
The Boeing vs. FLJ Group
Performance |
| Timeline |
| Boeing |
| FLJ Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Boeing and FLJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and FLJ
The main advantage of trading using opposite Boeing and FLJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, FLJ 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 FLJ will offset losses from the drop in FLJ's long position.The idea behind The Boeing and FLJ Group 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.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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