Correlation Between Boeing and Airbus Group

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

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

Diversification Opportunities for Boeing and Airbus Group

-0.68

Correlation Coefficient

Boeing  Airbus Group

Excellent diversification

The 3 months correlation between Boeing and Airbus is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Airbus Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group NV 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 Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group NV has no effect on the direction of Boeing i.e., Boeing and Airbus Group go up and down completely randomly.

Pair Corralation between Boeing and Airbus Group

Allowing for the 90-day total investment horizon Boeing is expected to generate 1.27 times less return on investment than Airbus Group. In addition to that, Boeing is 1.31 times more volatile than Airbus Group NV. It trades about 0.04 of its total potential returns per unit of risk. Airbus Group NV is currently generating about 0.06 per unit of volatility. If you would invest  2,824  in Airbus Group NV on January 20, 2024 and sell it today you would earn a total of  1,428  from holding Airbus Group NV or generate 50.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

The Boeing  vs.  Airbus Group NV

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.

Airbus Group NV

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Airbus Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boeing and Airbus Group

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

The idea behind The Boeing and Airbus Group NV 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 Global Correlations module to find global opportunities by holding instruments from different markets.