Correlation Between Boeing and Inverse Government

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

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

Diversification Opportunities for Boeing and Inverse Government

-0.79

Correlation Coefficient

Boeing  Inverse Government

Pay attention - limited upside

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

Pair Corralation between Boeing and Inverse Government

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Inverse Government. In addition to that, Boeing is 1.4 times more volatile than Inverse Government Long. It trades about -0.36 of its total potential returns per unit of risk. Inverse Government Long is currently generating about 0.24 per unit of volatility. If you would invest  19,586  in Inverse Government Long on January 20, 2024 and sell it today you would earn a total of  947.00  from holding Inverse Government Long or generate 4.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

The Boeing  vs.  Inverse Government Long

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.

Inverse Government Long

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inverse Government Long are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Inverse Government may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Boeing and Inverse Government

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

The idea behind The Boeing and Inverse Government Long 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.