Correlation Between Boeing and Magellan Midstream

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

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

Diversification Opportunities for Boeing and Magellan Midstream

0.0

Correlation Coefficient

Boeing  Magellan Midstream

Pay attention - limited upside

The 3 months correlation between Boeing and Magellan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Magellan Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Midstream 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 Magellan Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Midstream has no effect on the direction of Boeing i.e., Boeing and Magellan Midstream go up and down completely randomly.

Pair Corralation between Boeing and Magellan Midstream

If you would invest (100.00) in Magellan Midstream Partners on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Magellan Midstream Partners or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

The Boeing  vs.  Magellan Midstream Partners

Boeing

Risk-Adjusted Performance

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.

Magellan Midstream

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Boeing and Magellan Midstream

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

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