Correlation Between Talanx AG and Boeing

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

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

Diversification Opportunities for Talanx AG and Boeing

0.71

Correlation Coefficient

Talanx AG  Boeing

Poor diversification

The 3 months correlation between Talanx and Boeing is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Talanx AG 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 Talanx AG 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 Talanx AG i.e., Talanx AG and Boeing go up and down completely randomly.

Pair Corralation between Talanx AG and Boeing

Assuming the 90 days horizon Talanx AG is expected to generate 1.15 times less return on investment than Boeing. But when comparing it to its historical volatility, Talanx AG is 1.39 times less risky than Boeing. It trades about 0.18 of its potential returns per unit of risk. The Boeing is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  14,212  in The Boeing on October 6, 2024 and sell it today you would earn a total of  2,542  from holding The Boeing or generate 17.89% return on investment over 90 days.

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

Talanx AG  vs.  The Boeing

Talanx AG

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Talanx AG reported solid returns over the last few months and may actually be approaching a breakup point.

Boeing

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 11 (%) 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 Talanx AG and Boeing

The main advantage of trading using opposite Talanx AG and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG 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 Talanx AG 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 Transaction History module to view history of all your transactions and understand their impact on performance.