Correlation Between Boeing and Santos
Can any of the company-specific risk be diversified away by investing in both Boeing and Santos 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 Santos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Santos, you can compare the effects of market volatilities on Boeing and Santos 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 Santos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Santos.
Diversification Opportunities for Boeing and Santos
Poor diversification
The 3 months correlation between Boeing and Santos is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Santos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santos 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 Santos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santos has no effect on the direction of Boeing i.e., Boeing and Santos go up and down completely randomly.
Pair Corralation between Boeing and Santos
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Santos. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 1.47 times less risky than Santos. The stock trades about -0.05 of its potential returns per unit of risk. The Santos is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 490.00 in Santos on September 1, 2024 and sell it today you would lose (40.00) from holding Santos or give up 8.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.62% |
| Values | Daily Returns |
The Boeing vs. Santos
Performance |
| Timeline |
| Boeing |
| Santos |
Boeing and Santos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Santos
The main advantage of trading using opposite Boeing and Santos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Santos 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 Santos will offset losses from the drop in Santos' long position.| Boeing vs. Raytheon Technologies Corp | Boeing vs. Northrop Grumman | Boeing vs. General Dynamics | Boeing vs. L3Harris Technologies |
| Santos vs. Permian Resources | Santos vs. Devon Energy | Santos vs. EOG Resources | Santos vs. Coterra Energy |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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