Correlation Between Boeing and First Trust

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

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

Diversification Opportunities for Boeing and First Trust

-0.24

Correlation Coefficient

Boeing  First Trust

Very good diversification

The 3 months correlation between Boeing and First is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and First Trust United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust United 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust United has no effect on the direction of Boeing i.e., Boeing and First Trust go up and down completely randomly.

Pair Corralation between Boeing and First Trust

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the First Trust. In addition to that, Boeing is 2.34 times more volatile than First Trust United. It trades about -0.09 of its total potential returns per unit of risk. First Trust United is currently generating about 0.12 per unit of volatility. If you would invest  3,774  in First Trust United on February 28, 2024 and sell it today you would earn a total of  152.00  from holding First Trust United or generate 4.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

The Boeing  vs.  First Trust United

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 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.

First Trust United

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust United are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, First Trust may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Boeing and First Trust

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

The idea behind The Boeing and First Trust United 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.