Correlation Between Boeing and Cadre Holdings

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

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

Diversification Opportunities for Boeing and Cadre Holdings

0.03

Correlation Coefficient

Boeing  Cadre Holdings

Significant diversification

The 3 months correlation between Boeing and Cadre is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Cadre Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadre Holdings 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 Cadre Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadre Holdings has no effect on the direction of Boeing i.e., Boeing and Cadre Holdings go up and down completely randomly.

Pair Corralation between Boeing and Cadre Holdings

Allowing for the 90-day total investment horizon The Boeing is expected to generate 1.02 times more return on investment than Cadre Holdings. However, Boeing is 1.02 times more volatile than Cadre Holdings. It trades about 0.01 of its potential returns per unit of risk. Cadre Holdings is currently generating about 0.0 per unit of risk. If you would invest  18,201  in The Boeing on September 26, 2024 and sell it today you would lose (267.00) from holding The Boeing or give up 1.47% of portfolio value over 90 days.

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

The Boeing  vs.  Cadre Holdings

Boeing

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Cadre Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cadre Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Boeing and Cadre Holdings

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

The idea behind The Boeing and Cadre Holdings 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.