Correlation Between Boeing and Wave Life

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

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

Diversification Opportunities for Boeing and Wave Life

0.3

Correlation Coefficient

Boeing  Wave Life

Weak diversification

The 3 months correlation between Boeing and Wave is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Wave Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wave Life Sciences 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 Wave Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wave Life Sciences has no effect on the direction of Boeing i.e., Boeing and Wave Life go up and down completely randomly.

Pair Corralation between Boeing and Wave Life

Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.55 times more return on investment than Wave Life. However, The Boeing is 1.82 times less risky than Wave Life. It trades about 0.0 of its potential returns per unit of risk. Wave Life Sciences is currently generating about -0.08 per unit of risk. If you would invest  18,072  in The Boeing on December 27, 2024 and sell it today you would lose (217.00) from holding The Boeing or give up 1.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

The Boeing  vs.  Wave Life Sciences

Boeing

Risk-Adjusted Performance

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.

Wave Life Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wave Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Boeing and Wave Life

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

The idea behind The Boeing and Wave Life Sciences 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..