Correlation Between Boeing and Supernova Energy
Can any of the company-specific risk be diversified away by investing in both Boeing and Supernova Energy 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 Supernova Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Supernova Energy, you can compare the effects of market volatilities on Boeing and Supernova Energy 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 Supernova Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Supernova Energy.
Diversification Opportunities for Boeing and Supernova Energy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boeing and Supernova is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Supernova Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supernova Energy 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 Supernova Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supernova Energy has no effect on the direction of Boeing i.e., Boeing and Supernova Energy go up and down completely randomly.
Pair Corralation between Boeing and Supernova Energy
Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.11 times more return on investment than Supernova Energy. However, The Boeing is 9.4 times less risky than Supernova Energy. It trades about 0.28 of its potential returns per unit of risk. Supernova Energy is currently generating about -0.23 per unit of risk. If you would invest 15,704 in The Boeing on October 9, 2024 and sell it today you would earn a total of 1,374 from holding The Boeing or generate 8.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
The Boeing vs. Supernova Energy
Performance |
Timeline |
Boeing |
Supernova Energy |
Boeing and Supernova Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Boeing and Supernova Energy
The main advantage of trading using opposite Boeing and Supernova Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Supernova Energy 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 Supernova Energy will offset losses from the drop in Supernova Energy's long position.Boeing vs. Raytheon Technologies Corp | Boeing vs. Northrop Grumman | Boeing vs. General Dynamics | Boeing vs. L3Harris Technologies |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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