Correlation Between Boeing and Great Elm

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

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

Diversification Opportunities for Boeing and Great Elm

-0.23

Correlation Coefficient

Boeing  Great Elm

Very good diversification

The 3 months correlation between Boeing and Great is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Great Elm Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Elm Capital 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 Great Elm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Elm Capital has no effect on the direction of Boeing i.e., Boeing and Great Elm go up and down completely randomly.

Pair Corralation between Boeing and Great Elm

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Great Elm. In addition to that, Boeing is 3.32 times more volatile than Great Elm Capital. It trades about 0.0 of its total potential returns per unit of risk. Great Elm Capital is currently generating about 0.05 per unit of volatility. If you would invest  2,386  in Great Elm Capital on September 14, 2024 and sell it today you would earn a total of  91.00  from holding Great Elm Capital or generate 3.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	28.89%
Values	Daily Returns

The Boeing  vs.  Great Elm Capital

Boeing

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 6 (%) 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 January 2025.

Great Elm Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Elm Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Great Elm is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Boeing and Great Elm

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

The idea behind The Boeing and Great Elm Capital 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.