Correlation Between Innovative Solutions and Boeing

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

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

Diversification Opportunities for Innovative Solutions and Boeing

-0.64

Correlation Coefficient

Innovative Solutions  Boeing

Excellent diversification

The 3 months correlation between Innovative and Boeing is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Solutions and and Boeing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Innovative Solutions 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 Innovative Solutions and 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 Innovative Solutions i.e., Innovative Solutions and Boeing go up and down completely randomly.

Pair Corralation between Innovative Solutions and Boeing

Given the investment horizon of 90 days Innovative Solutions is expected to generate 1.23 times less return on investment than Boeing. In addition to that, Innovative Solutions is 1.06 times more volatile than Boeing Co. It trades about 0.13 of its total potential returns per unit of risk. Boeing Co is currently generating about 0.17 per unit of volatility. If you would invest  5,415  in Boeing Co on September 12, 2024 and sell it today you would earn a total of  444.00  from holding Boeing Co or generate 8.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	48.44%
Values	Daily Returns

Innovative Solutions and  vs.  Boeing Co

Innovative Solutions and

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Solutions and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Innovative Solutions exhibited solid returns over the last few months and may actually be approaching a breakup point.

Boeing

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boeing Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innovative Solutions and Boeing

The main advantage of trading using opposite Innovative Solutions and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Solutions 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 Innovative Solutions and and Boeing Co 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 Stocks Directory module to find actively traded stocks across global markets.