Correlation Between Boeing and MTU Aero

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

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

Diversification Opportunities for Boeing and MTU Aero

-0.07

Correlation Coefficient

Boeing  MTU Aero

Good diversification

The 3 months correlation between Boeing and MTU is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and MTU Aero Engines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTU Aero Engines 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 MTU Aero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTU Aero Engines has no effect on the direction of Boeing i.e., Boeing and MTU Aero go up and down completely randomly.

Pair Corralation between Boeing and MTU Aero

Assuming the 90 days horizon The Boeing is expected to under-perform the MTU Aero. In addition to that, Boeing is 1.09 times more volatile than MTU Aero Engines. It trades about -0.02 of its total potential returns per unit of risk. MTU Aero Engines is currently generating about 0.02 per unit of volatility. If you would invest  32,200  in MTU Aero Engines on December 30, 2024 and sell it today you would earn a total of  450.00  from holding MTU Aero Engines or generate 1.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Boeing  vs.  MTU Aero Engines

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 nearly stable basic indicators, Boeing is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

MTU Aero Engines

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MTU Aero Engines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, MTU Aero is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Boeing and MTU Aero

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

The idea behind The Boeing and MTU Aero Engines 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.