Correlation Between Boeing and Spirit Aerosystems
Can any of the company-specific risk be diversified away by investing in both Boeing and Spirit Aerosystems 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 Spirit Aerosystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Spirit Aerosystems Holdings, you can compare the effects of market volatilities on Boeing and Spirit Aerosystems 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 Spirit Aerosystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Spirit Aerosystems.
Diversification Opportunities for Boeing and Spirit Aerosystems
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boeing and Spirit is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Spirit Aerosystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Aerosystems 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 Spirit Aerosystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirit Aerosystems has no effect on the direction of Boeing i.e., Boeing and Spirit Aerosystems go up and down completely randomly.
Pair Corralation between Boeing and Spirit Aerosystems
Allowing for the 90-day total investment horizon The Boeing is expected to generate 1.37 times more return on investment than Spirit Aerosystems. However, Boeing is 1.37 times more volatile than Spirit Aerosystems Holdings. It trades about 0.01 of its potential returns per unit of risk. Spirit Aerosystems Holdings is currently generating about 0.0 per unit of risk. If you would invest 15,932 in The Boeing on January 12, 2025 and sell it today you would lose (248.00) from holding The Boeing or give up 1.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Spirit Aerosystems Holdings
Performance |
| Timeline |
| Boeing |
| Spirit Aerosystems |
Boeing and Spirit Aerosystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Spirit Aerosystems
The main advantage of trading using opposite Boeing and Spirit Aerosystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Spirit Aerosystems 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 Spirit Aerosystems will offset losses from the drop in Spirit Aerosystems' long position.| Boeing vs. Raytheon Technologies Corp | Boeing vs. Northrop Grumman | Boeing vs. General Dynamics | Boeing vs. L3Harris Technologies |
| Spirit Aerosystems vs. Howmet Aerospace | Spirit Aerosystems vs. Huntington Ingalls Industries | Spirit Aerosystems vs. L3Harris Technologies | Spirit Aerosystems vs. Embraer SA ADR |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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