Correlation Between Rheinmetall and Boeing
Can any of the company-specific risk be diversified away by investing in both Rheinmetall 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 Rheinmetall and Boeing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG ADR and The Boeing, you can compare the effects of market volatilities on Rheinmetall 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 Rheinmetall with a short position of Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Boeing.
Diversification Opportunities for Rheinmetall and Boeing
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rheinmetall and Boeing is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG ADR and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Rheinmetall 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 Rheinmetall AG ADR 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 Rheinmetall i.e., Rheinmetall and Boeing go up and down completely randomly.
Pair Corralation between Rheinmetall and Boeing
Assuming the 90 days horizon Rheinmetall AG ADR is expected to generate 1.06 times more return on investment than Boeing. However, Rheinmetall is 1.06 times more volatile than The Boeing. It trades about 0.41 of its potential returns per unit of risk. The Boeing is currently generating about 0.03 per unit of risk. If you would invest 10,541 in Rheinmetall AG ADR on August 31, 2024 and sell it today you would earn a total of 2,462 from holding Rheinmetall AG ADR or generate 23.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Rheinmetall AG ADR vs. The Boeing
Performance |
| Timeline |
| Rheinmetall AG ADR |
| Boeing |
Rheinmetall and Boeing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Boeing
The main advantage of trading using opposite Rheinmetall and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall 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.| Rheinmetall vs. Hensoldt AG | Rheinmetall vs. Heico | Rheinmetall vs. AeroVironment | Rheinmetall vs. Transdigm Group Incorporated |
| Boeing vs. Raytheon Technologies Corp | Boeing vs. Northrop Grumman | Boeing vs. General Dynamics | Boeing vs. L3Harris Technologies |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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