Correlation Between L3Harris Technologies and Boeing

Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies 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 L3Harris Technologies and Boeing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between L3Harris Technologies and The Boeing, you can compare the effects of market volatilities on L3Harris Technologies 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 L3Harris Technologies with a short position of Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and Boeing.

Diversification Opportunities for L3Harris Technologies and Boeing

-0.47

Correlation Coefficient

L3Harris Technologies  Boeing

Very good diversification

The 3 months correlation between L3Harris and Boeing is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and L3Harris Technologies 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 L3Harris Technologies 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 L3Harris Technologies i.e., L3Harris Technologies and Boeing go up and down completely randomly.

Pair Corralation between L3Harris Technologies and Boeing

Considering the 90-day investment horizon L3Harris Technologies is expected to generate 0.63 times more return on investment than Boeing. However, L3Harris Technologies is 1.6 times less risky than Boeing. It trades about 0.01 of its potential returns per unit of risk. The Boeing is currently generating about 0.0 per unit of risk. If you would invest  20,780  in L3Harris Technologies on December 28, 2024 and sell it today you would lose (5.00) from holding L3Harris Technologies or give up 0.02% of portfolio value over 90 days.

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

L3Harris Technologies  vs.  The Boeing

L3Harris Technologies

Risk-Adjusted Performance

Weak

Over the last 90 days L3Harris Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, L3Harris Technologies is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Boeing

Risk-Adjusted Performance

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with L3Harris Technologies and Boeing

The main advantage of trading using opposite L3Harris Technologies and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies 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 L3Harris Technologies 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.