Correlation Between Boeing and Fuel Tech
Can any of the company-specific risk be diversified away by investing in both Boeing and Fuel Tech 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 Fuel Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Fuel Tech, you can compare the effects of market volatilities on Boeing and Fuel Tech 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 Fuel Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Fuel Tech.
Diversification Opportunities for Boeing and Fuel Tech
Very good diversification
The 3 months correlation between Boeing and Fuel is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Fuel Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuel Tech 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 Fuel Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuel Tech has no effect on the direction of Boeing i.e., Boeing and Fuel Tech go up and down completely randomly.
Pair Corralation between Boeing and Fuel Tech
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Fuel Tech. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 1.03 times less risky than Fuel Tech. The stock trades about -0.07 of its potential returns per unit of risk. The Fuel Tech is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 106.00 in Fuel Tech on August 26, 2024 and sell it today you would earn a total of 1.00 from holding Fuel Tech or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Fuel Tech
Performance |
| Timeline |
| Boeing |
| Fuel Tech |
Boeing and Fuel Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Fuel Tech
The main advantage of trading using opposite Boeing and Fuel Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Fuel Tech 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 Fuel Tech will offset losses from the drop in Fuel Tech's long position.The idea behind The Boeing and Fuel Tech 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.| Fuel Tech vs. Federal Signal | Fuel Tech vs. CECO Environmental Corp | Fuel Tech vs. Zurn Elkay Water | Fuel Tech vs. Greenlane Renewables |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Stocks Directory Find actively traded stocks across global markets |