Correlation Between Boeing and Universal Power
Can any of the company-specific risk be diversified away by investing in both Boeing and Universal Power 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 Universal Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Universal Power Industry, you can compare the effects of market volatilities on Boeing and Universal Power 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 Universal Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Universal Power.
Diversification Opportunities for Boeing and Universal Power
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Boeing and Universal is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Universal Power Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Power Industry 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 Universal Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Power Industry has no effect on the direction of Boeing i.e., Boeing and Universal Power go up and down completely randomly.
Pair Corralation between Boeing and Universal Power
Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.14 times more return on investment than Universal Power. However, The Boeing is 7.07 times less risky than Universal Power. It trades about 0.04 of its potential returns per unit of risk. Universal Power Industry is currently generating about -0.22 per unit of risk. If you would invest 17,516 in The Boeing on November 27, 2024 and sell it today you would earn a total of 213.00 from holding The Boeing or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Universal Power Industry
Performance |
| Timeline |
| Boeing |
| Universal Power Industry |
Boeing and Universal Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Universal Power
The main advantage of trading using opposite Boeing and Universal Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Universal Power 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 Universal Power will offset losses from the drop in Universal Power's long position.The idea behind The Boeing and Universal Power Industry 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.| Universal Power vs. National Health Scan | Universal Power vs. Protect Pharmaceutical | Universal Power vs. World Oil Group | Universal Power vs. Steel Partners Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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