Correlation Between Boeing and ITM Power
Can any of the company-specific risk be diversified away by investing in both Boeing and ITM Power 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 ITM Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and ITM Power Plc, you can compare the effects of market volatilities on Boeing and ITM Power 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 ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and ITM Power.
Diversification Opportunities for Boeing and ITM Power
Very weak diversification
The 3 months correlation between Boeing and ITM is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc 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 ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Boeing i.e., Boeing and ITM Power go up and down completely randomly.
Pair Corralation between Boeing and ITM Power
Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.43 times more return on investment than ITM Power. However, The Boeing is 2.33 times less risky than ITM Power. It trades about -0.04 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.02 per unit of risk. If you would invest 22,156 in The Boeing on September 4, 2024 and sell it today you would lose (6,502) from holding The Boeing or give up 29.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. ITM Power Plc
Performance |
| Timeline |
| Boeing |
| ITM Power Plc |
Boeing and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and ITM Power
The main advantage of trading using opposite Boeing and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.The idea behind The Boeing and ITM Power Plc 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.| ITM Power vs. Dear Cashmere Holding | ITM Power vs. Goff Corp | ITM Power vs. Wialan Technologies | ITM Power vs. Cgrowth Capital |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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