Correlation Between Boeing and Holly Energy

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

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

Diversification Opportunities for Boeing and Holly Energy

-0.56

Correlation Coefficient

Boeing  Holly Energy

Excellent diversification

The 3 months correlation between Boeing and Holly is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Holly Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holly Energy Partners 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 Holly Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holly Energy Partners has no effect on the direction of Boeing i.e., Boeing and Holly Energy go up and down completely randomly.

Pair Corralation between Boeing and Holly Energy

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Holly Energy. In addition to that, Boeing is 1.54 times more volatile than Holly Energy Partners. It trades about -0.01 of its total potential returns per unit of risk. Holly Energy Partners is currently generating about 0.08 per unit of volatility. If you would invest  1,677  in Holly Energy Partners on September 4, 2024 and sell it today you would earn a total of  267.00  from holding Holly Energy Partners or generate 15.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	30.71%
Values	Daily Returns

The Boeing  vs.  Holly Energy Partners

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Holly Energy Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holly Energy Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Holly Energy is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Boeing and Holly Energy

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

The idea behind The Boeing and Holly Energy Partners 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.