Correlation Between BOEING CDR and Xtract One

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

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

Diversification Opportunities for BOEING CDR and Xtract One

-0.87

Correlation Coefficient

BOEING CDR  Xtract One

Pay attention - limited upside

The 3 months correlation between BOEING and Xtract is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding BOEING CDR and Xtract One Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtract One 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 Xtract One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtract One Technologies has no effect on the direction of BOEING CDR i.e., BOEING CDR and Xtract One go up and down completely randomly.

Pair Corralation between BOEING CDR and Xtract One

Assuming the 90 days trading horizon BOEING CDR is expected to under-perform the Xtract One. But the stock apears to be less risky and, when comparing its historical volatility, BOEING CDR is 2.07 times less risky than Xtract One. The stock trades about -0.02 of its potential returns per unit of risk. The Xtract One Technologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  55.00  in Xtract One Technologies on October 21, 2024 and sell it today you would lose (4.00) from holding Xtract One Technologies or give up 7.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	91.73%
Values	Daily Returns

BOEING CDR  vs.  Xtract One Technologies

BOEING CDR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BOEING CDR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, BOEING CDR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Xtract One Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtract One Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BOEING CDR and Xtract One

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

The idea behind BOEING CDR and Xtract One 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.