Correlation Between Boeing and Companhia Brasileira

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

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

Diversification Opportunities for Boeing and Companhia Brasileira

0.91

Correlation Coefficient

Boeing  Companhia Brasileira

Almost no diversification

The 3 months correlation between Boeing and Companhia is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Companhia Brasileira de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Brasileira 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 Companhia Brasileira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Brasileira has no effect on the direction of Boeing i.e., Boeing and Companhia Brasileira go up and down completely randomly.

Pair Corralation between Boeing and Companhia Brasileira

Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.4 times more return on investment than Companhia Brasileira. However, The Boeing is 2.48 times less risky than Companhia Brasileira. It trades about -0.21 of its potential returns per unit of risk. Companhia Brasileira de is currently generating about -0.19 per unit of risk. If you would invest  21,413  in The Boeing on January 24, 2024 and sell it today you would lose (4,365) from holding The Boeing or give up 20.38% of portfolio value over 90 days.

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

The Boeing  vs.  Companhia Brasileira de

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.

Companhia Brasileira

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Brasileira de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Boeing and Companhia Brasileira

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

The idea behind The Boeing and Companhia Brasileira de 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.