Correlation Between Boeing and Pimco Long

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

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

Diversification Opportunities for Boeing and Pimco Long

-0.48

Correlation Coefficient

Boeing  Pimco Long

Very good diversification

The 3 months correlation between Boeing and Pimco is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Pimco Long Term Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Long Term 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 Pimco Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Long Term has no effect on the direction of Boeing i.e., Boeing and Pimco Long go up and down completely randomly.

Pair Corralation between Boeing and Pimco Long

Allowing for the 90-day total investment horizon The Boeing is expected to generate 2.47 times more return on investment than Pimco Long. However, Boeing is 2.47 times more volatile than Pimco Long Term Government. It trades about 0.09 of its potential returns per unit of risk. Pimco Long Term Government is currently generating about -0.14 per unit of risk. If you would invest  15,465  in The Boeing on October 8, 2024 and sell it today you would earn a total of  1,525  from holding The Boeing or generate 9.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

The Boeing  vs.  Pimco Long Term Government

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.

Pimco Long Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Long Term Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Boeing and Pimco Long

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

The idea behind The Boeing and Pimco Long Term Government 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.