Correlation Between Boeing and Merrill Lynch
Can any of the company-specific risk be diversified away by investing in both Boeing and Merrill Lynch 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 Merrill Lynch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Merrill Lynch, you can compare the effects of market volatilities on Boeing and Merrill Lynch 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 Merrill Lynch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Merrill Lynch.
Diversification Opportunities for Boeing and Merrill Lynch
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boeing and Merrill is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Merrill Lynch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merrill Lynch 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 Merrill Lynch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merrill Lynch has no effect on the direction of Boeing i.e., Boeing and Merrill Lynch go up and down completely randomly.
Pair Corralation between Boeing and Merrill Lynch
If you would invest (100.00) in Merrill Lynch on September 2, 2024 and sell it today you would earn a total of 100.00 from holding Merrill Lynch or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
The Boeing vs. Merrill Lynch
Performance |
| Timeline |
| Boeing |
| Merrill Lynch |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Boeing and Merrill Lynch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Merrill Lynch
The main advantage of trading using opposite Boeing and Merrill Lynch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Merrill Lynch 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 Merrill Lynch will offset losses from the drop in Merrill Lynch's long position.The idea behind The Boeing and Merrill Lynch 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |