Correlation Between Boeing and NSTAR Electric
Can any of the company-specific risk be diversified away by investing in both Boeing and NSTAR Electric 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 NSTAR Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and NSTAR Electric, you can compare the effects of market volatilities on Boeing and NSTAR Electric 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 NSTAR Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and NSTAR Electric.
Diversification Opportunities for Boeing and NSTAR Electric
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boeing and NSTAR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and NSTAR Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR Electric 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 NSTAR Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR Electric has no effect on the direction of Boeing i.e., Boeing and NSTAR Electric go up and down completely randomly.
Pair Corralation between Boeing and NSTAR Electric
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the NSTAR Electric. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 1.23 times less risky than NSTAR Electric. The stock trades about -0.01 of its potential returns per unit of risk. The NSTAR Electric is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 7,921 in NSTAR Electric on November 28, 2024 and sell it today you would lose (71.00) from holding NSTAR Electric or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 26.85% |
| Values | Daily Returns |
The Boeing vs. NSTAR Electric
Performance |
| Timeline |
| Boeing |
| NSTAR Electric |
Boeing and NSTAR Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and NSTAR Electric
The main advantage of trading using opposite Boeing and NSTAR Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, NSTAR Electric 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 NSTAR Electric will offset losses from the drop in NSTAR Electric's long position.The idea behind The Boeing and NSTAR Electric 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.| NSTAR Electric vs. Life Time Group | NSTAR Electric vs. Arcos Dorados Holdings | NSTAR Electric vs. Alto Ingredients | NSTAR Electric vs. Griffon |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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