Correlation Between Boeing and Amplifon SpA

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

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

Diversification Opportunities for Boeing and Amplifon SpA

0.0

Correlation Coefficient

Boeing  Amplifon SpA

Pay attention - limited upside

The 3 months correlation between Boeing and Amplifon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Amplifon SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplifon SpA and Boeing 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 The Boeing are associated (or correlated) with Amplifon SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplifon SpA has no effect on the direction of Boeing i.e., Boeing and Amplifon SpA go up and down completely randomly.

Pair Corralation between Boeing and Amplifon SpA

Allowing for the 90-day total investment horizon Boeing is expected to generate 1.72 times less return on investment than Amplifon SpA. But when comparing it to its historical volatility, The Boeing is 2.58 times less risky than Amplifon SpA. It trades about 0.04 of its potential returns per unit of risk. Amplifon SpA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,934  in Amplifon SpA on February 1, 2024 and sell it today you would earn a total of  53.00  from holding Amplifon SpA or generate 1.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	42.22%
Values	Daily Returns

The Boeing  vs.  Amplifon SpA

Boeing

Risk-Adjusted Performance

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Very Weak

Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Amplifon SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amplifon SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Amplifon SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Boeing and Amplifon SpA

The main advantage of trading using opposite Boeing and Amplifon SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Amplifon SpA 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 Amplifon SpA will offset losses from the drop in Amplifon SpA's long position.

The idea behind The Boeing and Amplifon SpA 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.