Correlation Between Boeing and Western Alaska
Can any of the company-specific risk be diversified away by investing in both Boeing and Western Alaska 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 Western Alaska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Western Alaska Minerals, you can compare the effects of market volatilities on Boeing and Western Alaska 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 Western Alaska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Western Alaska.
Diversification Opportunities for Boeing and Western Alaska
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Boeing and Western is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Western Alaska Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Alaska Minerals 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 Western Alaska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Alaska Minerals has no effect on the direction of Boeing i.e., Boeing and Western Alaska go up and down completely randomly.
Pair Corralation between Boeing and Western Alaska
Allowing for the 90-day total investment horizon Boeing is expected to generate 4.6 times less return on investment than Western Alaska. But when comparing it to its historical volatility, The Boeing is 3.73 times less risky than Western Alaska. It trades about 0.09 of its potential returns per unit of risk. Western Alaska Minerals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Western Alaska Minerals on November 3, 2024 and sell it today you would earn a total of 4.00 from holding Western Alaska Minerals or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Boeing vs. Western Alaska Minerals
Performance |
| Timeline |
| Boeing |
| Western Alaska Minerals |
Boeing and Western Alaska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Western Alaska
The main advantage of trading using opposite Boeing and Western Alaska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Western Alaska 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 Western Alaska will offset losses from the drop in Western Alaska's long position.The idea behind The Boeing and Western Alaska Minerals 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.| Western Alaska vs. First Tellurium Corp | Western Alaska vs. Max Resource Corp | Western Alaska vs. P2 Gold | Western Alaska vs. CMC Metals |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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