Correlation Between Boeing and NATIONAL

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

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

Diversification Opportunities for Boeing and NATIONAL

0.76

Correlation Coefficient

Boeing  NATIONAL

Poor diversification

The 3 months correlation between Boeing and NATIONAL is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and NATIONAL RURAL UTILS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL RURAL UTILS 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 NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL RURAL UTILS has no effect on the direction of Boeing i.e., Boeing and NATIONAL go up and down completely randomly.

Pair Corralation between Boeing and NATIONAL

Allowing for the 90-day total investment horizon The Boeing is expected to generate 2.27 times more return on investment than NATIONAL. However, Boeing is 2.27 times more volatile than NATIONAL RURAL UTILS. It trades about 0.15 of its potential returns per unit of risk. NATIONAL RURAL UTILS is currently generating about 0.2 per unit of risk. If you would invest  17,556  in The Boeing on November 20, 2024 and sell it today you would earn a total of  886.00  from holding The Boeing or generate 5.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	55.0%
Values	Daily Returns

The Boeing  vs.  NATIONAL RURAL UTILS

Boeing

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 19 (%) 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.

NATIONAL RURAL UTILS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NATIONAL RURAL UTILS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NATIONAL may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Boeing and NATIONAL

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

The idea behind The Boeing and NATIONAL RURAL UTILS 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.