Correlation Between Boeing and NextSource Materials
Can any of the company-specific risk be diversified away by investing in both Boeing and NextSource Materials 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 NextSource Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and NextSource Materials, you can compare the effects of market volatilities on Boeing and NextSource Materials 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 NextSource Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and NextSource Materials.
Diversification Opportunities for Boeing and NextSource Materials
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boeing and NextSource is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and NextSource Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextSource Materials 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 NextSource Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextSource Materials has no effect on the direction of Boeing i.e., Boeing and NextSource Materials go up and down completely randomly.
Pair Corralation between Boeing and NextSource Materials
Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.48 times more return on investment than NextSource Materials. However, The Boeing is 2.08 times less risky than NextSource Materials. It trades about -0.01 of its potential returns per unit of risk. NextSource Materials is currently generating about -0.05 per unit of risk. If you would invest 18,568 in The Boeing on September 7, 2024 and sell it today you would lose (2,894) from holding The Boeing or give up 15.59% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.8% |
Values | Daily Returns |
The Boeing vs. NextSource Materials
Performance |
Timeline |
Boeing |
NextSource Materials |
Boeing and NextSource Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Boeing and NextSource Materials
The main advantage of trading using opposite Boeing and NextSource Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, NextSource Materials 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 NextSource Materials will offset losses from the drop in NextSource Materials' long position.Boeing vs. Raytheon Technologies Corp | Boeing vs. Northrop Grumman | Boeing vs. General Dynamics | Boeing vs. L3Harris Technologies |
NextSource Materials vs. Leading Edge Materials | NextSource Materials vs. Syrah Resources Limited | NextSource Materials vs. Mason Graphite | NextSource Materials vs. Graphite One |
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.
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