Correlation Between Boeing and Geo
Can any of the company-specific risk be diversified away by investing in both Boeing and Geo 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 Geo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Geo Group, you can compare the effects of market volatilities on Boeing and Geo 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 Geo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Geo.
Diversification Opportunities for Boeing and Geo
Excellent diversification
The 3 months correlation between Boeing and Geo is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Geo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo 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 Geo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Group has no effect on the direction of Boeing i.e., Boeing and Geo go up and down completely randomly.
Pair Corralation between Boeing and Geo
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Geo. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 4.44 times less risky than Geo. The stock trades about -0.01 of its potential returns per unit of risk. The Geo Group is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,624 in Geo Group on August 27, 2024 and sell it today you would earn a total of 1,244 from holding Geo Group or generate 76.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Geo Group
Performance |
| Timeline |
| Boeing |
| Geo Group |
Boeing and Geo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Geo
The main advantage of trading using opposite Boeing and Geo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Geo 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 Geo will offset losses from the drop in Geo's long position.The idea behind The Boeing and Geo 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |