Correlation Between Boeing and INTERNATIONAL

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

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

Diversification Opportunities for Boeing and INTERNATIONAL

-0.48

Correlation Coefficient

Boeing  INTERNATIONAL

Very good diversification

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

Pair Corralation between Boeing and INTERNATIONAL

Allowing for the 90-day total investment horizon The Boeing is expected to generate 2.15 times more return on investment than INTERNATIONAL. However, Boeing is 2.15 times more volatile than INTERNATIONAL FLAVORS FRAGRANCES. It trades about 0.12 of its potential returns per unit of risk. INTERNATIONAL FLAVORS FRAGRANCES is currently generating about -0.05 per unit of risk. If you would invest  14,937  in The Boeing on October 9, 2024 and sell it today you would earn a total of  2,141  from holding The Boeing or generate 14.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.08%
Values	Daily Returns

The Boeing  vs.  INTERNATIONAL FLAVORS FRAGRANC

Boeing

Risk-Adjusted Performance

9 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

INTERNATIONAL FLAVORS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTERNATIONAL FLAVORS FRAGRANCES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INTERNATIONAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boeing and INTERNATIONAL

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

The idea behind The Boeing and INTERNATIONAL FLAVORS FRAGRANCES 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.