Correlation Between Boeing and Fibra Plus

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

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

Diversification Opportunities for Boeing and Fibra Plus

0.24

Correlation Coefficient

Boeing  Fibra Plus

Modest diversification

The 3 months correlation between Boeing and Fibra is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Fibra Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Plus 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 Fibra Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra Plus has no effect on the direction of Boeing i.e., Boeing and Fibra Plus go up and down completely randomly.

Pair Corralation between Boeing and Fibra Plus

Assuming the 90 days horizon The Boeing is expected to generate 0.6 times more return on investment than Fibra Plus. However, The Boeing is 1.67 times less risky than Fibra Plus. It trades about 0.17 of its potential returns per unit of risk. Fibra Plus is currently generating about 0.05 per unit of risk. If you would invest  287,000  in The Boeing on October 10, 2024 and sell it today you would earn a total of  62,500  from holding The Boeing or generate 21.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

The Boeing  vs.  Fibra Plus

Boeing

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Boeing showed solid returns over the last few months and may actually be approaching a breakup point.

Fibra Plus

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fibra Plus are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fibra Plus may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Boeing and Fibra Plus

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

The idea behind The Boeing and Fibra Plus 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.