Correlation Between ITALIAN WINE and Boeing

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

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

Diversification Opportunities for ITALIAN WINE and Boeing

0.55

Correlation Coefficient

ITALIAN WINE  Boeing

Very weak diversification

The 3 months correlation between ITALIAN and Boeing is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and ITALIAN WINE 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 ITALIAN WINE BRANDS 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 ITALIAN WINE i.e., ITALIAN WINE and Boeing go up and down completely randomly.

Pair Corralation between ITALIAN WINE and Boeing

Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to under-perform the Boeing. In addition to that, ITALIAN WINE is 1.11 times more volatile than The Boeing. It trades about -0.04 of its total potential returns per unit of risk. The Boeing is currently generating about 0.14 per unit of volatility. If you would invest  14,278  in The Boeing on October 23, 2024 and sell it today you would earn a total of  2,294  from holding The Boeing or generate 16.07% return on investment over 90 days.

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

ITALIAN WINE BRANDS  vs.  The Boeing

ITALIAN WINE BRANDS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITALIAN WINE BRANDS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ITALIAN WINE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Boeing

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with ITALIAN WINE and Boeing

The main advantage of trading using opposite ITALIAN WINE and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE 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 ITALIAN WINE BRANDS 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.