Correlation Between Caribbean Utilities and BOEING CDR

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

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

Diversification Opportunities for Caribbean Utilities and BOEING CDR

0.56

Correlation Coefficient

Caribbean Utilities  BOEING CDR

Very weak diversification

The 3 months correlation between Caribbean and BOEING is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Caribbean Utilities and BOEING CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOEING CDR and Caribbean Utilities 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 Caribbean Utilities are associated (or correlated) with BOEING CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOEING CDR has no effect on the direction of Caribbean Utilities i.e., Caribbean Utilities and BOEING CDR go up and down completely randomly.

Pair Corralation between Caribbean Utilities and BOEING CDR

Assuming the 90 days trading horizon Caribbean Utilities is expected to generate 1.53 times more return on investment than BOEING CDR. However, Caribbean Utilities is 1.53 times more volatile than BOEING CDR. It trades about 0.02 of its potential returns per unit of risk. BOEING CDR is currently generating about -0.01 per unit of risk. If you would invest  1,313  in Caribbean Utilities on October 26, 2024 and sell it today you would earn a total of  82.00  from holding Caribbean Utilities or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.66%
Values	Daily Returns

Caribbean Utilities  vs.  BOEING CDR

Caribbean Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caribbean Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Caribbean Utilities is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BOEING CDR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BOEING CDR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BOEING CDR displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caribbean Utilities and BOEING CDR

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

The idea behind Caribbean Utilities and BOEING CDR 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.