Correlation Between BOEING CDR and Sable Resources

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

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

Diversification Opportunities for BOEING CDR and Sable Resources

-0.55

Correlation Coefficient

BOEING CDR  Sable Resources

Excellent diversification

The 3 months correlation between BOEING and Sable is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding BOEING CDR and Sable Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Resources 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 Sable Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Resources has no effect on the direction of BOEING CDR i.e., BOEING CDR and Sable Resources go up and down completely randomly.

Pair Corralation between BOEING CDR and Sable Resources

Assuming the 90 days trading horizon BOEING CDR is expected to under-perform the Sable Resources. But the stock apears to be less risky and, when comparing its historical volatility, BOEING CDR is 3.49 times less risky than Sable Resources. The stock trades about -0.04 of its potential returns per unit of risk. The Sable Resources is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Sable Resources on October 9, 2024 and sell it today you would lose (2.00) from holding Sable Resources or give up 40.0% of portfolio value over 90 days.

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

BOEING CDR  vs.  Sable Resources

BOEING CDR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BOEING CDR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, BOEING CDR displayed solid returns over the last few months and may actually be approaching a breakup point.

Sable Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with BOEING CDR and Sable Resources

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

The idea behind BOEING CDR and Sable Resources 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.