Correlation Between Boeing and Akamai Technologies

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

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

Diversification Opportunities for Boeing and Akamai Technologies

0.79

Correlation Coefficient

Boeing  Akamai Technologies

Poor diversification

The 3 months correlation between Boeing and Akamai is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Akamai Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akamai Technologies 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 Akamai Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akamai Technologies has no effect on the direction of Boeing i.e., Boeing and Akamai Technologies go up and down completely randomly.

Pair Corralation between Boeing and Akamai Technologies

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Akamai Technologies. In addition to that, Boeing is 1.17 times more volatile than Akamai Technologies. It trades about -0.36 of its total potential returns per unit of risk. Akamai Technologies is currently generating about -0.32 per unit of volatility. If you would invest  10,960  in Akamai Technologies on January 20, 2024 and sell it today you would lose (810.00) from holding Akamai Technologies or give up 7.39% of portfolio value over 90 days.

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

The Boeing  vs.  Akamai Technologies

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Akamai Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akamai Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Boeing and Akamai Technologies

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

The idea behind The Boeing and Akamai Technologies 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.