Correlation Between Boeing and Hensoldt

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

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

Diversification Opportunities for Boeing and Hensoldt

0.67

Correlation Coefficient

Boeing  Hensoldt

Poor diversification

The 3 months correlation between Boeing and Hensoldt is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Hensoldt AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hensoldt AG 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 Hensoldt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hensoldt AG has no effect on the direction of Boeing i.e., Boeing and Hensoldt go up and down completely randomly.

Pair Corralation between Boeing and Hensoldt

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Hensoldt. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 1.6 times less risky than Hensoldt. The stock trades about -0.01 of its potential returns per unit of risk. The Hensoldt AG is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,709  in Hensoldt AG on October 10, 2024 and sell it today you would earn a total of  991.00  from holding Hensoldt AG or generate 36.58% return on investment over 90 days.

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

The Boeing  vs.  Hensoldt AG

Boeing

Risk-Adjusted Performance

11 of 100

OK

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.

Hensoldt AG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hensoldt AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Hensoldt may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Boeing and Hensoldt

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

The idea behind The Boeing and Hensoldt AG 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.