Correlation Between Boeing and New Energy
Can any of the company-specific risk be diversified away by investing in both Boeing and New Energy 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 Energy 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 Energy Metals, you can compare the effects of market volatilities on Boeing and New Energy 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 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and New Energy.
Diversification Opportunities for Boeing and New Energy
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boeing and New is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and New Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Energy 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 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Energy Metals has no effect on the direction of Boeing i.e., Boeing and New Energy go up and down completely randomly.
Pair Corralation between Boeing and New Energy
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the New Energy. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 7.23 times less risky than New Energy. The stock trades about -0.01 of its potential returns per unit of risk. The New Energy Metals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 207.00 in New Energy Metals on September 1, 2024 and sell it today you would lose (176.00) from holding New Energy Metals or give up 85.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. New Energy Metals
Performance |
| Timeline |
| Boeing |
| New Energy Metals |
Boeing and New Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and New Energy
The main advantage of trading using opposite Boeing and New Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, New Energy 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 Energy will offset losses from the drop in New Energy's long position.| Boeing vs. Raytheon Technologies Corp | Boeing vs. Northrop Grumman | Boeing vs. General Dynamics | Boeing vs. L3Harris Technologies |
| New Energy vs. Legacy Education | New Energy vs. Apple Inc | New Energy vs. NVIDIA | New Energy vs. Microsoft |
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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