Correlation Between Boeing and Midwest Holding
Can any of the company-specific risk be diversified away by investing in both Boeing and Midwest Holding 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 Midwest Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Midwest Holding, you can compare the effects of market volatilities on Boeing and Midwest Holding 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 Midwest Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Midwest Holding.
Diversification Opportunities for Boeing and Midwest Holding
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boeing and Midwest is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Midwest Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midwest Holding 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 Midwest Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midwest Holding has no effect on the direction of Boeing i.e., Boeing and Midwest Holding go up and down completely randomly.
Pair Corralation between Boeing and Midwest Holding
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Midwest Holding. In addition to that, Boeing is 2.68 times more volatile than Midwest Holding. It trades about -0.03 of its total potential returns per unit of risk. Midwest Holding is currently generating about 0.11 per unit of volatility. If you would invest 2,583 in Midwest Holding on August 31, 2024 and sell it today you would earn a total of 68.00 from holding Midwest Holding or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 8.56% |
| Values | Daily Returns |
The Boeing vs. Midwest Holding
Performance |
| Timeline |
| Boeing |
| Midwest Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Boeing and Midwest Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Midwest Holding
The main advantage of trading using opposite Boeing and Midwest Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Midwest Holding 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 Midwest Holding will offset losses from the drop in Midwest Holding's long position.| Boeing vs. Raytheon Technologies Corp | Boeing vs. Northrop Grumman | Boeing vs. General Dynamics | Boeing vs. L3Harris Technologies |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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