Correlation Between Boeing and LEVEL

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

By analyzing existing cross correlation between The Boeing and LEVEL 3 FING, you can compare the effects of market volatilities on Boeing and LEVEL 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 LEVEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and LEVEL.

Diversification Opportunities for Boeing and LEVEL

-0.35

Correlation Coefficient

Boeing  LEVEL

Very good diversification

The 3 months correlation between Boeing and LEVEL is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and LEVEL 3 FING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEVEL 3 FING 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 LEVEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEVEL 3 FING has no effect on the direction of Boeing i.e., Boeing and LEVEL go up and down completely randomly.

Pair Corralation between Boeing and LEVEL

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the LEVEL. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 2.04 times less risky than LEVEL. The stock trades about -0.01 of its potential returns per unit of risk. The LEVEL 3 FING is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6,900  in LEVEL 3 FING on September 3, 2024 and sell it today you would lose (367.00) from holding LEVEL 3 FING or give up 5.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.38%
Values	Daily Returns

The Boeing  vs.  LEVEL 3 FING

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 recent stock price disturbance, may contribute to short-term losses for the investors.

LEVEL 3 FING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LEVEL 3 FING has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LEVEL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boeing and LEVEL

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

The idea behind The Boeing and LEVEL 3 FING 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.