Correlation Between Park Aerospace and Boeing

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

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

Diversification Opportunities for Park Aerospace and Boeing

0.44

Correlation Coefficient

Park Aerospace  Boeing

Very weak diversification

The 3 months correlation between Park and Boeing is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Park Aerospace Corp and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Park Aerospace 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 Park Aerospace Corp 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 Park Aerospace i.e., Park Aerospace and Boeing go up and down completely randomly.

Pair Corralation between Park Aerospace and Boeing

Assuming the 90 days horizon Park Aerospace Corp is expected to generate 1.0 times more return on investment than Boeing. However, Park Aerospace Corp is 1.0 times less risky than Boeing. It trades about 0.06 of its potential returns per unit of risk. The Boeing is currently generating about 0.01 per unit of risk. If you would invest  1,227  in Park Aerospace Corp on September 29, 2024 and sell it today you would earn a total of  183.00  from holding Park Aerospace Corp or generate 14.91% return on investment over 90 days.

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

Park Aerospace Corp  vs.  The Boeing

Park Aerospace Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Park Aerospace Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Park Aerospace reported solid returns over the last few months and may actually be approaching a breakup point.

Boeing

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Boeing reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Park Aerospace and Boeing

The main advantage of trading using opposite Park Aerospace and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Aerospace 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 Park Aerospace Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..