Correlation Between Boeing and Harford Bank

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

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

Diversification Opportunities for Boeing and Harford Bank

-0.59

Correlation Coefficient

Boeing  Harford Bank

Excellent diversification

The 3 months correlation between Boeing and Harford is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Harford Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harford Bank 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 Harford Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harford Bank has no effect on the direction of Boeing i.e., Boeing and Harford Bank go up and down completely randomly.

Pair Corralation between Boeing and Harford Bank

Allowing for the 90-day total investment horizon The Boeing is expected to generate 3.33 times more return on investment than Harford Bank. However, Boeing is 3.33 times more volatile than Harford Bank. It trades about 0.51 of its potential returns per unit of risk. Harford Bank is currently generating about -0.19 per unit of risk. If you would invest  14,387  in The Boeing on September 19, 2024 and sell it today you would earn a total of  2,916  from holding The Boeing or generate 20.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

The Boeing  vs.  Harford Bank

Boeing

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 7 (%) 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.

Harford Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harford Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Harford Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Boeing and Harford Bank

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

The idea behind The Boeing and Harford Bank 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.