Correlation Between Boeing and Global X

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

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

Diversification Opportunities for Boeing and Global X

-0.67

Correlation Coefficient

Boeing  Global X

Excellent diversification

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

Pair Corralation between Boeing and Global X

Allowing for the 90-day total investment horizon Boeing is expected to generate 16.61 times less return on investment than Global X. But when comparing it to its historical volatility, The Boeing is 1.05 times less risky than Global X. It trades about 0.0 of its potential returns per unit of risk. Global X Lithium is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,374  in Global X Lithium on August 30, 2024 and sell it today you would earn a total of  91.00  from holding Global X Lithium or generate 2.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

The Boeing  vs.  Global X Lithium

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Global X Lithium

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Lithium are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, Global X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boeing and Global X

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

The idea behind The Boeing and Global X Lithium 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.