Correlation Between Boeing and Huntington Ingalls
Can any of the company-specific risk be diversified away by investing in both Boeing and Huntington Ingalls 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 Huntington Ingalls into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Huntington Ingalls Industries, you can compare the effects of market volatilities on Boeing and Huntington Ingalls 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 Huntington Ingalls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Huntington Ingalls.
Diversification Opportunities for Boeing and Huntington Ingalls
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boeing and Huntington is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Huntington Ingalls Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Ingalls 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 Huntington Ingalls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Ingalls has no effect on the direction of Boeing i.e., Boeing and Huntington Ingalls go up and down completely randomly.
Pair Corralation between Boeing and Huntington Ingalls
Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.38 times more return on investment than Huntington Ingalls. However, The Boeing is 2.64 times less risky than Huntington Ingalls. It trades about -0.06 of its potential returns per unit of risk. Huntington Ingalls Industries is currently generating about -0.15 per unit of risk. If you would invest 15,501 in The Boeing on August 26, 2024 and sell it today you would lose (572.00) from holding The Boeing or give up 3.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Huntington Ingalls Industries
Performance |
| Timeline |
| Boeing |
| Huntington Ingalls |
Boeing and Huntington Ingalls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Huntington Ingalls
The main advantage of trading using opposite Boeing and Huntington Ingalls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Huntington Ingalls 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 Huntington Ingalls will offset losses from the drop in Huntington Ingalls' long position.The idea behind The Boeing and Huntington Ingalls Industries 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.| Huntington Ingalls vs. Lockheed Martin | Huntington Ingalls vs. General Dynamics | Huntington Ingalls vs. Raytheon Technologies Corp | Huntington Ingalls vs. L3Harris Technologies |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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