Correlation Between Boeing and Identiv
Can any of the company-specific risk be diversified away by investing in both Boeing and Identiv 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 Identiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Identiv, you can compare the effects of market volatilities on Boeing and Identiv 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 Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Identiv.
Diversification Opportunities for Boeing and Identiv
Excellent diversification
The 3 months correlation between Boeing and Identiv is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv 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 Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of Boeing i.e., Boeing and Identiv go up and down completely randomly.
Pair Corralation between Boeing and Identiv
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Identiv. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 1.5 times less risky than Identiv. The stock trades about -0.06 of its potential returns per unit of risk. The Identiv is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 439.00 in Identiv on August 30, 2024 and sell it today you would lose (52.00) from holding Identiv or give up 11.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Identiv
Performance |
| Timeline |
| Boeing |
| Identiv |
Boeing and Identiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Identiv
The main advantage of trading using opposite Boeing and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Identiv 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 Identiv will offset losses from the drop in Identiv's long position.The idea behind The Boeing and Identiv 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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