Correlation Between Boeing and Cardinal Energy

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

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

Diversification Opportunities for Boeing and Cardinal Energy

-0.77

Correlation Coefficient

Boeing  Cardinal Energy

Pay attention - limited upside

The 3 months correlation between Boeing and Cardinal is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Cardinal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Energy 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 Cardinal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Energy has no effect on the direction of Boeing i.e., Boeing and Cardinal Energy go up and down completely randomly.

Pair Corralation between Boeing and Cardinal Energy

Allowing for the 90-day total investment horizon The Boeing is expected to generate 1.33 times more return on investment than Cardinal Energy. However, Boeing is 1.33 times more volatile than Cardinal Energy. It trades about -0.03 of its potential returns per unit of risk. Cardinal Energy is currently generating about -0.09 per unit of risk. If you would invest  18,314  in The Boeing on February 5, 2024 and sell it today you would lose (335.00) from holding The Boeing or give up 1.83% of portfolio value over 90 days.

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

The Boeing  vs.  Cardinal Energy

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 June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Cardinal Energy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Cardinal Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boeing and Cardinal Energy

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

The idea behind The Boeing and Cardinal Energy 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.