Correlation Between Boeing and Globex Mining

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

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

Diversification Opportunities for Boeing and Globex Mining

-0.04

Correlation Coefficient

Boeing  Globex Mining

Good diversification

The 3 months correlation between Boeing and Globex is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises 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 Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of Boeing i.e., Boeing and Globex Mining go up and down completely randomly.

Pair Corralation between Boeing and Globex Mining

Allowing for the 90-day total investment horizon Boeing is expected to generate 2.88 times less return on investment than Globex Mining. But when comparing it to its historical volatility, The Boeing is 1.07 times less risky than Globex Mining. It trades about 0.06 of its potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  62.00  in Globex Mining Enterprises on September 13, 2024 and sell it today you would earn a total of  15.00  from holding Globex Mining Enterprises or generate 24.19% return on investment over 90 days.

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

The Boeing  vs.  Globex Mining Enterprises

Boeing

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 5 (%) 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.

Globex Mining Enterprises

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Globex Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boeing and Globex Mining

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

The idea behind The Boeing and Globex Mining Enterprises 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.