Correlation Between Boeing and ProShares Hedge

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Can any of the company-specific risk be diversified away by investing in both Boeing and ProShares Hedge 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 ProShares Hedge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and ProShares Hedge Replication, you can compare the effects of market volatilities on Boeing and ProShares Hedge 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 ProShares Hedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and ProShares Hedge.

Diversification Opportunities for Boeing and ProShares Hedge

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Boeing and ProShares is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and ProShares Hedge Replication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Hedge Repl 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 ProShares Hedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Hedge Repl has no effect on the direction of Boeing i.e., Boeing and ProShares Hedge go up and down completely randomly.

Pair Corralation between Boeing and ProShares Hedge

Allowing for the 90-day total investment horizon The Boeing is expected to generate 4.2 times more return on investment than ProShares Hedge. However, Boeing is 4.2 times more volatile than ProShares Hedge Replication. It trades about 0.1 of its potential returns per unit of risk. ProShares Hedge Replication is currently generating about 0.11 per unit of risk. If you would invest  20,044  in The Boeing on December 1, 2023 and sell it today you would earn a total of  656.00  from holding The Boeing or generate 3.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

The Boeing  vs.  ProShares Hedge Replication

 Performance 
       Timeline  
Boeing 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
ProShares Hedge Repl 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Hedge Replication are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, ProShares Hedge is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Boeing and ProShares Hedge Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Boeing and ProShares Hedge

The main advantage of trading using opposite Boeing and ProShares Hedge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, ProShares Hedge 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 ProShares Hedge will offset losses from the drop in ProShares Hedge's long position.
The idea behind The Boeing and ProShares Hedge Replication 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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