Correlation Between Sturm Ruger and Boeing

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

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

Diversification Opportunities for Sturm Ruger and Boeing

-0.32

Correlation Coefficient

Sturm Ruger  Boeing

Very good diversification

The 3 months correlation between Sturm and Boeing is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sturm Ruger and Boeing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Sturm Ruger 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 Sturm Ruger 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 Sturm Ruger i.e., Sturm Ruger and Boeing go up and down completely randomly.

Pair Corralation between Sturm Ruger and Boeing

Considering the 90-day investment horizon Sturm Ruger is expected to generate 1.01 times more return on investment than Boeing. However, Sturm Ruger is 1.01 times more volatile than Boeing Co. It trades about 0.14 of its potential returns per unit of risk. Boeing Co is currently generating about 0.01 per unit of risk. If you would invest  3,445  in Sturm Ruger on December 28, 2024 and sell it today you would earn a total of  548.00  from holding Sturm Ruger or generate 15.91% return on investment over 90 days.

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

Sturm Ruger  vs.  Boeing Co

Sturm Ruger

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sturm Ruger are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal technical and fundamental indicators, Sturm Ruger reported solid returns over the last few months and may actually be approaching a breakup point.

Boeing

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boeing Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Boeing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sturm Ruger and Boeing

The main advantage of trading using opposite Sturm Ruger and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sturm Ruger 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 Sturm Ruger 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.