Correlation Between Boeing and UNITED

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

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

Diversification Opportunities for Boeing and UNITED

-0.49

Correlation Coefficient

Boeing  UNITED

Very good diversification

The 3 months correlation between Boeing and UNITED is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and UNITED TECHNOLOGIES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED TECHNOLOGIES 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 UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED TECHNOLOGIES has no effect on the direction of Boeing i.e., Boeing and UNITED go up and down completely randomly.

Pair Corralation between Boeing and UNITED

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the UNITED. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 1.06 times less risky than UNITED. The stock trades about -0.01 of its potential returns per unit of risk. The UNITED TECHNOLOGIES P is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,816  in UNITED TECHNOLOGIES P on October 11, 2024 and sell it today you would lose (743.00) from holding UNITED TECHNOLOGIES P or give up 6.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	48.59%
Values	Daily Returns

The Boeing  vs.  UNITED TECHNOLOGIES P

Boeing

Risk-Adjusted Performance

9 of 100

Good

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.

UNITED TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED TECHNOLOGIES P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for UNITED TECHNOLOGIES P investors.

Pair Trading with Boeing and UNITED

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

The idea behind The Boeing and UNITED TECHNOLOGIES P 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 Managers module to screen money managers from public funds and ETFs managed around the world.