Correlation Between BOEING CDR and Exro Technologies

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

By analyzing existing cross correlation between BOEING CDR and Exro Technologies, you can compare the effects of market volatilities on BOEING CDR and Exro Technologies 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 CDR with a short position of Exro Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOEING CDR and Exro Technologies.

Diversification Opportunities for BOEING CDR and Exro Technologies

-0.08

Correlation Coefficient

BOEING CDR  Exro Technologies

Good diversification

The 3 months correlation between BOEING and Exro is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding BOEING CDR and Exro Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exro Technologies and BOEING CDR 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 BOEING CDR are associated (or correlated) with Exro Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exro Technologies has no effect on the direction of BOEING CDR i.e., BOEING CDR and Exro Technologies go up and down completely randomly.

Pair Corralation between BOEING CDR and Exro Technologies

Assuming the 90 days trading horizon BOEING CDR is expected to under-perform the Exro Technologies. But the stock apears to be less risky and, when comparing its historical volatility, BOEING CDR is 3.35 times less risky than Exro Technologies. The stock trades about -0.02 of its potential returns per unit of risk. The Exro Technologies is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Exro Technologies on December 21, 2024 and sell it today you would lose (2.00) from holding Exro Technologies or give up 15.38% of portfolio value over 90 days.

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

BOEING CDR  vs.  Exro Technologies

BOEING CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days BOEING CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, BOEING CDR is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Exro Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exro Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Exro Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BOEING CDR and Exro Technologies

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

The idea behind BOEING CDR and Exro Technologies 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.