Correlation Between Boeing and FLJ Old

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

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

Diversification Opportunities for Boeing and FLJ Old

0.39

Correlation Coefficient

Boeing  FLJ Old

Weak diversification

The 3 months correlation between Boeing and FLJ is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and FLJ Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLJ Old 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 FLJ Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLJ Old has no effect on the direction of Boeing i.e., Boeing and FLJ Old go up and down completely randomly.

Pair Corralation between Boeing and FLJ Old

If you would invest  15,069  in The Boeing on October 27, 2024 and sell it today you would earn a total of  2,537  from holding The Boeing or generate 16.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.67%
Values	Daily Returns

The Boeing  vs.  FLJ Old

Boeing

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

FLJ Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FLJ Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady essential indicators, FLJ Old is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Boeing and FLJ Old

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

The idea behind The Boeing and FLJ Old 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.