Correlation Between VSE and Boeing

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

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

Diversification Opportunities for VSE and Boeing

-0.35

Correlation Coefficient

VSE  Boeing

Very good diversification

The 3 months correlation between VSE and Boeing is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. and Boeing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and VSE 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 VSE Corporation 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 VSE i.e., VSE and Boeing go up and down completely randomly.

Pair Corralation between VSE and Boeing

Given the investment horizon of 90 days VSE Corporation is expected to generate 1.73 times more return on investment than Boeing. However, VSE is 1.73 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 0.0 per unit of risk. If you would invest  9,672  in VSE Corporation on December 27, 2024 and sell it today you would earn a total of  2,635  from holding VSE Corporation or generate 27.24% return on investment over 90 days.

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

VSE Corp.  vs.  Boeing Co

VSE Corporation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VSE Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, VSE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Boeing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boeing Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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 VSE and Boeing

The main advantage of trading using opposite VSE and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VSE 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 VSE Corporation 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.