Correlation Between Boeing and Rational Strategic

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

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

Diversification Opportunities for Boeing and Rational Strategic

-0.44

Correlation Coefficient

Boeing  Rational Strategic

Very good diversification

The 3 months correlation between Boeing and Rational is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Rational Strategic Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Strategic 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 Rational Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Strategic has no effect on the direction of Boeing i.e., Boeing and Rational Strategic go up and down completely randomly.

Pair Corralation between Boeing and Rational Strategic

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Rational Strategic. In addition to that, Boeing is 1.54 times more volatile than Rational Strategic Allocation. It trades about -0.02 of its total potential returns per unit of risk. Rational Strategic Allocation is currently generating about 0.1 per unit of volatility. If you would invest  877.00  in Rational Strategic Allocation on September 4, 2024 and sell it today you would earn a total of  66.00  from holding Rational Strategic Allocation or generate 7.53% 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.  Rational Strategic Allocation

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 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.

Rational Strategic

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Strategic Allocation are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Rational Strategic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Boeing and Rational Strategic

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

The idea behind The Boeing and Rational Strategic Allocation 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.