Correlation Between Boeing and FG Merger

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

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

Diversification Opportunities for Boeing and FG Merger

0.43

Correlation Coefficient

Boeing  FG Merger

Very weak diversification

The 3 months correlation between Boeing and FGMC is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and FG Merger II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Merger II 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 FG Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Merger II has no effect on the direction of Boeing i.e., Boeing and FG Merger go up and down completely randomly.

Pair Corralation between Boeing and FG Merger

Allowing for the 90-day total investment horizon The Boeing is expected to generate 17.54 times more return on investment than FG Merger. However, Boeing is 17.54 times more volatile than FG Merger II. It trades about 0.0 of its potential returns per unit of risk. FG Merger II is currently generating about -0.21 per unit of risk. If you would invest  18,038  in The Boeing on December 26, 2024 and sell it today you would lose (187.00) from holding The Boeing or give up 1.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	50.82%
Values	Daily Returns

The Boeing  vs.  FG Merger II

Boeing

Risk-Adjusted Performance

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.

FG Merger II

Risk-Adjusted Performance

Very Weak

Over the last 90 days FG Merger II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, FG Merger is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Boeing and FG Merger

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

The idea behind The Boeing and FG Merger II 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.