Correlation Between NTG Nordic and Boeing

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

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

Diversification Opportunities for NTG Nordic and Boeing

-0.82

Correlation Coefficient

NTG Nordic  Boeing

Pay attention - limited upside

The 3 months correlation between NTG and Boeing is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and NTG Nordic 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 NTG Nordic Transport 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 NTG Nordic i.e., NTG Nordic and Boeing go up and down completely randomly.

Pair Corralation between NTG Nordic and Boeing

Assuming the 90 days trading horizon NTG Nordic Transport is expected to generate 1.36 times more return on investment than Boeing. However, NTG Nordic is 1.36 times more volatile than The Boeing. It trades about 0.02 of its potential returns per unit of risk. The Boeing is currently generating about -0.01 per unit of risk. If you would invest  3,310  in NTG Nordic Transport on October 4, 2024 and sell it today you would earn a total of  125.00  from holding NTG Nordic Transport or generate 3.78% return on investment over 90 days.

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

NTG Nordic Transport  vs.  The Boeing

NTG Nordic Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Boeing

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with NTG Nordic and Boeing

The main advantage of trading using opposite NTG Nordic and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic 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 NTG Nordic Transport 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.