Correlation Between Redwire Corp and Boeing
Can any of the company-specific risk be diversified away by investing in both Redwire Corp 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 Redwire Corp and Boeing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redwire Corp and The Boeing, you can compare the effects of market volatilities on Redwire Corp 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 Redwire Corp with a short position of Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwire Corp and Boeing.
Diversification Opportunities for Redwire Corp and Boeing
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Redwire and Boeing is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Redwire Corp and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Redwire Corp 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 Redwire Corp 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 Redwire Corp i.e., Redwire Corp and Boeing go up and down completely randomly.
Pair Corralation between Redwire Corp and Boeing
Considering the 90-day investment horizon Redwire Corp is expected to generate 2.17 times more return on investment than Boeing. However, Redwire Corp is 2.17 times more volatile than The Boeing. It trades about 0.11 of its potential returns per unit of risk. The Boeing is currently generating about -0.02 per unit of risk. If you would invest 307.00 in Redwire Corp on August 29, 2024 and sell it today you would earn a total of 1,071 from holding Redwire Corp or generate 348.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redwire Corp vs. The Boeing
Performance |
| Timeline |
| Redwire Corp |
| Boeing |
Redwire Corp and Boeing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwire Corp and Boeing
The main advantage of trading using opposite Redwire Corp and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwire Corp 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.| Redwire Corp vs. Sidus Space | Redwire Corp vs. Rocket Lab USA | Redwire Corp vs. Momentus | Redwire Corp vs. Planet Labs PBC |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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