Correlation Between Boeing and CoreCivic

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

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

Diversification Opportunities for Boeing and CoreCivic

-0.05

Correlation Coefficient

Boeing  CoreCivic

Good diversification

The 3 months correlation between Boeing and CoreCivic is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and CoreCivic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCivic 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 CoreCivic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreCivic has no effect on the direction of Boeing i.e., Boeing and CoreCivic go up and down completely randomly.

Pair Corralation between Boeing and CoreCivic

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the CoreCivic. In addition to that, Boeing is 1.21 times more volatile than CoreCivic. It trades about -0.09 of its total potential returns per unit of risk. CoreCivic is currently generating about 0.1 per unit of volatility. If you would invest  1,453  in CoreCivic on March 5, 2024 and sell it today you would earn a total of  152.00  from holding CoreCivic or generate 10.46% return on investment over 90 days.

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

The Boeing  vs.  CoreCivic

Boeing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CoreCivic

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CoreCivic are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CoreCivic may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Boeing and CoreCivic

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

The idea behind The Boeing and CoreCivic 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.