Correlation Between CAE and Boeing
Can any of the company-specific risk be diversified away by investing in both CAE and Boeing 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 CAE and Boeing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAE Inc and The Boeing, you can compare the effects of market volatilities on CAE and Boeing 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 CAE with a short position of Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAE and Boeing.
Diversification Opportunities for CAE and Boeing
Excellent diversification
The 3 months correlation between CAE and Boeing is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CAE Inc and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and CAE 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 CAE Inc are associated (or correlated) with Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of CAE i.e., CAE and Boeing go up and down completely randomly.
Pair Corralation between CAE and Boeing
Considering the 90-day investment horizon CAE Inc is expected to generate 0.93 times more return on investment than Boeing. However, CAE Inc is 1.07 times less risky than Boeing. It trades about 0.02 of its potential returns per unit of risk. The Boeing is currently generating about -0.01 per unit of risk. If you would invest 2,092 in CAE Inc on August 26, 2024 and sell it today you would earn a total of 198.00 from holding CAE Inc or generate 9.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAE Inc vs. The Boeing
Performance |
| Timeline |
| CAE Inc |
| Boeing |
CAE and Boeing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAE and Boeing
The main advantage of trading using opposite CAE and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAE position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.The idea behind CAE Inc and The Boeing 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.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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |