Correlation Between Boeing and Cibl

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

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

Diversification Opportunities for Boeing and Cibl

-0.6

Correlation Coefficient

Boeing  Cibl

Excellent diversification

The 3 months correlation between Boeing and Cibl is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Cibl Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cibl Inc 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 Cibl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cibl Inc has no effect on the direction of Boeing i.e., Boeing and Cibl go up and down completely randomly.

Pair Corralation between Boeing and Cibl

Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.63 times more return on investment than Cibl. However, The Boeing is 1.58 times less risky than Cibl. It trades about 0.1 of its potential returns per unit of risk. Cibl Inc is currently generating about -0.02 per unit of risk. If you would invest  14,931  in The Boeing on September 1, 2024 and sell it today you would earn a total of  613.00  from holding The Boeing or generate 4.11% return on investment over 90 days.

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

The Boeing  vs.  Cibl Inc

Boeing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Boeing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cibl Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cibl Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Cibl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boeing and Cibl

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

The idea behind The Boeing and Cibl Inc 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.