Correlation Between Bitcoin and Boeing

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

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

Diversification Opportunities for Bitcoin and Boeing

0.43

Correlation Coefficient

Bitcoin  Boeing

Very weak diversification

The 3 months correlation between Bitcoin and Boeing is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Bitcoin 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 Bitcoin are associated (or correlated) with Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of Bitcoin i.e., Bitcoin and Boeing go up and down completely randomly.

Pair Corralation between Bitcoin and Boeing

Assuming the 90 days trading horizon Bitcoin is expected to generate 1.71 times more return on investment than Boeing. However, Bitcoin is 1.71 times more volatile than The Boeing. It trades about 0.22 of its potential returns per unit of risk. The Boeing is currently generating about 0.14 per unit of risk. If you would invest  6,701,472  in Bitcoin on October 25, 2024 and sell it today you would earn a total of  3,658,428  from holding Bitcoin or generate 54.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Bitcoin  vs.  The Boeing

Bitcoin

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Boeing

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Boeing displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitcoin and Boeing

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

The idea behind Bitcoin and The Boeing 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.