Correlation Between Boeing and WH Group

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

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

Diversification Opportunities for Boeing and WH Group

-0.4

Correlation Coefficient

Boeing  WH Group

Very good diversification

The 3 months correlation between Boeing and WHGRF is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and WH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WH Group Limited 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 WH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WH Group Limited has no effect on the direction of Boeing i.e., Boeing and WH Group go up and down completely randomly.

Pair Corralation between Boeing and WH Group

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the WH Group. In addition to that, Boeing is 1.79 times more volatile than WH Group Limited. It trades about -0.02 of its total potential returns per unit of risk. WH Group Limited is currently generating about 0.16 per unit of volatility. If you would invest  71.00  in WH Group Limited on September 10, 2024 and sell it today you would earn a total of  8.00  from holding WH Group Limited or generate 11.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

The Boeing  vs.  WH Group Limited

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

WH Group Limited

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WH Group Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, WH Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Boeing and WH Group

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

The idea behind The Boeing and WH Group Limited 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.