Correlation Between Boeing and Trinity Industries
Can any of the company-specific risk be diversified away by investing in both Boeing and Trinity Industries 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 Trinity Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Trinity Industries, you can compare the effects of market volatilities on Boeing and Trinity Industries 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 Trinity Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Trinity Industries.
Diversification Opportunities for Boeing and Trinity Industries
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Boeing and Trinity is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Trinity Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Industries 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 Trinity Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Industries has no effect on the direction of Boeing i.e., Boeing and Trinity Industries go up and down completely randomly.
Pair Corralation between Boeing and Trinity Industries
Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Trinity Industries. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 1.32 times less risky than Trinity Industries. The stock trades about -0.12 of its potential returns per unit of risk. The Trinity Industries is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,476 in Trinity Industries on August 24, 2024 and sell it today you would earn a total of 241.00 from holding Trinity Industries or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Trinity Industries
Performance |
| Timeline |
| Boeing |
| Trinity Industries |
Boeing and Trinity Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Trinity Industries
The main advantage of trading using opposite Boeing and Trinity Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Trinity Industries 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 Trinity Industries will offset losses from the drop in Trinity Industries' long position.| Boeing vs. Coca Cola Consolidated | Boeing vs. Koppers Holdings | Boeing vs. Coca Cola Femsa SAB | Boeing vs. Know Labs |
| Trinity Industries vs. LB Foster | Trinity Industries vs. Freightcar America | Trinity Industries vs. Westinghouse Air Brake | Trinity Industries vs. Norfolk Southern |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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