Correlation Between Boeing and ProShares Russell

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

By analyzing existing cross correlation between The Boeing and ProShares Russell 2000, you can compare the effects of market volatilities on Boeing and ProShares Russell 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 ProShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and ProShares Russell.

Diversification Opportunities for Boeing and ProShares Russell

0.56

Correlation Coefficient

Boeing  ProShares Russell

Very weak diversification

The 3 months correlation between Boeing and ProShares is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and ProShares Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Russell 2000 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 ProShares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Russell 2000 has no effect on the direction of Boeing i.e., Boeing and ProShares Russell go up and down completely randomly.

Pair Corralation between Boeing and ProShares Russell

Allowing for the 90-day total investment horizon The Boeing is expected to generate 2.21 times more return on investment than ProShares Russell. However, Boeing is 2.21 times more volatile than ProShares Russell 2000. It trades about 0.02 of its potential returns per unit of risk. ProShares Russell 2000 is currently generating about -0.05 per unit of risk. If you would invest  18,038  in The Boeing on December 26, 2024 and sell it today you would earn a total of  221.00  from holding The Boeing or generate 1.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

The Boeing  vs.  ProShares Russell 2000

Boeing

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Boeing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ProShares Russell 2000

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Russell 2000 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, ProShares Russell is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Boeing and ProShares Russell

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

The idea behind The Boeing and ProShares Russell 2000 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.