Correlation Between Trupanion and Boeing

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

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

Diversification Opportunities for Trupanion and Boeing

-0.5

Correlation Coefficient

Trupanion  Boeing

Very good diversification

The 3 months correlation between Trupanion and Boeing is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Trupanion and Boeing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Trupanion 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 Trupanion 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 Trupanion i.e., Trupanion and Boeing go up and down completely randomly.

Pair Corralation between Trupanion and Boeing

Given the investment horizon of 90 days Trupanion is expected to generate 9.38 times less return on investment than Boeing. In addition to that, Trupanion is 2.42 times more volatile than Boeing Co. It trades about 0.03 of its total potential returns per unit of risk. Boeing Co is currently generating about 0.66 per unit of volatility. If you would invest  5,039  in Boeing Co on September 15, 2024 and sell it today you would earn a total of  918.00  from holding Boeing Co or generate 18.22% return on investment over 90 days.

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

Trupanion  vs.  Boeing Co

Trupanion

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trupanion are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Trupanion 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 Boeing Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trupanion and Boeing

The main advantage of trading using opposite Trupanion and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trupanion 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 Trupanion 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.