Correlation Between Boeing and Blue Line

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

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

Diversification Opportunities for Boeing and Blue Line

-0.56

Correlation Coefficient

Boeing  Blue Line

Excellent diversification

The 3 months correlation between Boeing and Blue is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Blue Line Protection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Line Protection 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 Blue Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Line Protection has no effect on the direction of Boeing i.e., Boeing and Blue Line go up and down completely randomly.

Pair Corralation between Boeing and Blue Line

Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.19 times more return on investment than Blue Line. However, The Boeing is 5.37 times less risky than Blue Line. It trades about 0.09 of its potential returns per unit of risk. Blue Line Protection is currently generating about -0.02 per unit of risk. If you would invest  15,591  in The Boeing on October 5, 2024 and sell it today you would earn a total of  1,596  from holding The Boeing or generate 10.24% return on investment over 90 days.

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

The Boeing  vs.  Blue Line Protection

Boeing

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Blue Line Protection

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Line Protection has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Boeing and Blue Line

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

The idea behind The Boeing and Blue Line Protection 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.