Correlation Between BOEING CDR and Primaris Retail

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

By analyzing existing cross correlation between BOEING CDR and Primaris Retail RE, you can compare the effects of market volatilities on BOEING CDR and Primaris Retail 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 Primaris Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOEING CDR and Primaris Retail.

Diversification Opportunities for BOEING CDR and Primaris Retail

-0.41

Correlation Coefficient

BOEING CDR  Primaris Retail

Very good diversification

The 3 months correlation between BOEING and Primaris is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BOEING CDR and Primaris Retail RE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primaris Retail RE 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 Primaris Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primaris Retail RE has no effect on the direction of BOEING CDR i.e., BOEING CDR and Primaris Retail go up and down completely randomly.

Pair Corralation between BOEING CDR and Primaris Retail

Assuming the 90 days trading horizon BOEING CDR is expected to under-perform the Primaris Retail. In addition to that, BOEING CDR is 1.82 times more volatile than Primaris Retail RE. It trades about -0.02 of its total potential returns per unit of risk. Primaris Retail RE is currently generating about 0.12 per unit of volatility. If you would invest  1,487  in Primaris Retail RE on September 3, 2024 and sell it today you would earn a total of  125.00  from holding Primaris Retail RE or generate 8.41% return on investment over 90 days.

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

BOEING CDR  vs.  Primaris Retail RE

BOEING CDR

Risk-Adjusted Performance

0 of 100

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 latest stock price disarray, may contribute to short-term losses for the investors.

Primaris Retail RE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Primaris Retail RE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Primaris Retail may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BOEING CDR and Primaris Retail

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

The idea behind BOEING CDR and Primaris Retail RE 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.