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 The Boeing, 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

-0.63

Correlation Coefficient

VSE  Boeing

Excellent diversification

The 3 months correlation between VSE and Boeing is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. and The Boeing 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 is expected to generate 2.5 times less return on investment than Boeing. In addition to that, VSE is 2.01 times more volatile than The Boeing. It trades about 0.02 of its total potential returns per unit of risk. The Boeing is currently generating about 0.12 per unit of volatility. If you would invest  15,654  in The Boeing on December 2, 2024 and sell it today you would earn a total of  1,809  from holding The Boeing or generate 11.56% return on investment over 90 days.

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

VSE Corp.  vs.  The Boeing

VSE Corporation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VSE Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, VSE is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Boeing

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..