Correlation Between Boeing and Knorr-Bremse Aktiengesellscha

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

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

Diversification Opportunities for Boeing and Knorr-Bremse Aktiengesellscha

-0.55

Correlation Coefficient

Boeing  Knorr-Bremse Aktiengesellscha

Excellent diversification

The 3 months correlation between Boeing and Knorr-Bremse is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Knorr Bremse Aktiengesellschaf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knorr-Bremse Aktiengesellscha 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 Knorr-Bremse Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knorr-Bremse Aktiengesellscha has no effect on the direction of Boeing i.e., Boeing and Knorr-Bremse Aktiengesellscha go up and down completely randomly.

Pair Corralation between Boeing and Knorr-Bremse Aktiengesellscha

Allowing for the 90-day total investment horizon The Boeing is expected to generate 1.13 times more return on investment than Knorr-Bremse Aktiengesellscha. However, Boeing is 1.13 times more volatile than Knorr Bremse Aktiengesellschaft. It trades about 0.09 of its potential returns per unit of risk. Knorr Bremse Aktiengesellschaft is currently generating about -0.15 per unit of risk. If you would invest  15,706  in The Boeing on October 23, 2024 and sell it today you would earn a total of  1,403  from holding The Boeing or generate 8.93% return on investment over 90 days.

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

The Boeing  vs.  Knorr Bremse Aktiengesellschaf

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 February 2025.

Knorr-Bremse Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knorr Bremse Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Boeing and Knorr-Bremse Aktiengesellscha

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

The idea behind The Boeing and Knorr Bremse Aktiengesellschaft 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.