Correlation Between Boeing and Somerset Trust
Can any of the company-specific risk be diversified away by investing in both Boeing and Somerset Trust 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 Somerset Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Somerset Trust Holding, you can compare the effects of market volatilities on Boeing and Somerset Trust 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 Somerset Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Somerset Trust.
Diversification Opportunities for Boeing and Somerset Trust
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boeing and Somerset is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Somerset Trust Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Somerset Trust 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 Somerset Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Somerset Trust Holding has no effect on the direction of Boeing i.e., Boeing and Somerset Trust go up and down completely randomly.
Pair Corralation between Boeing and Somerset Trust
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Somerset Trust. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 1.65 times less risky than Somerset Trust. The stock trades about -0.01 of its potential returns per unit of risk. The Somerset Trust Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,578 in Somerset Trust Holding on August 26, 2024 and sell it today you would earn a total of 912.00 from holding Somerset Trust Holding or generate 25.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 82.49% |
| Values | Daily Returns |
The Boeing vs. Somerset Trust Holding
Performance |
| Timeline |
| Boeing |
| Somerset Trust Holding |
Boeing and Somerset Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Somerset Trust
The main advantage of trading using opposite Boeing and Somerset Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Somerset Trust 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 Somerset Trust will offset losses from the drop in Somerset Trust's long position.The idea behind The Boeing and Somerset Trust Holding 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.| Somerset Trust vs. Invesco High Income | Somerset Trust vs. Blackrock Muniholdings Ny | Somerset Trust vs. MFS Investment Grade | Somerset Trust vs. Federated Premier Municipal |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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