Correlation Between Boeing and New Age
Can any of the company-specific risk be diversified away by investing in both Boeing and New Age 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 New Age into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and New Age Metals, you can compare the effects of market volatilities on Boeing and New Age 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 New Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and New Age.
Diversification Opportunities for Boeing and New Age
Excellent diversification
The 3 months correlation between Boeing and New is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and New Age Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Age Metals 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 New Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Age Metals has no effect on the direction of Boeing i.e., Boeing and New Age go up and down completely randomly.
Pair Corralation between Boeing and New Age
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the New Age. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 5.17 times less risky than New Age. The stock trades about -0.02 of its potential returns per unit of risk. The New Age Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5.00 in New Age Metals on November 28, 2024 and sell it today you would earn a total of 0.47 from holding New Age Metals or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. New Age Metals
Performance |
| Timeline |
| Boeing |
| New Age Metals |
Boeing and New Age Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and New Age
The main advantage of trading using opposite Boeing and New Age positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, New Age 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 New Age will offset losses from the drop in New Age's long position.The idea behind The Boeing and New Age Metals 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.| New Age vs. Vision Lithium | New Age vs. Group Ten Metals | New Age vs. Generation Mining Limited | New Age vs. Nickel Creek Platinum |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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