Correlation Between Boeing and Apple

Can any of the company-specific risk be diversified away by investing in both Boeing and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Boeing and Apple Inc, you can compare the effects of market volatilities on Boeing and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Apple.

Diversification Opportunities for Boeing and Apple

-0.02

Correlation Coefficient

Boeing  Apple

Good diversification

The 3 months correlation between Boeing and Apple is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Boeing i.e., Boeing and Apple go up and down completely randomly.

Pair Corralation between Boeing and Apple

Assuming the 90 days horizon The Boeing is expected to under-perform the Apple. In addition to that, Boeing is 1.47 times more volatile than Apple Inc. It trades about -0.04 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.08 per unit of volatility. If you would invest  450,122  in Apple Inc on August 30, 2024 and sell it today you would earn a total of  33,367  from holding Apple Inc or generate 7.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Boeing  vs.  Apple Inc

Boeing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Boeing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Apple Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Boeing and Apple

The main advantage of trading using opposite Boeing and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.

The idea behind The Boeing and Apple Inc 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.