Correlation Between Orbital Energy and Boeing

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

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

Diversification Opportunities for Orbital Energy and Boeing

0.67

Correlation Coefficient

Orbital Energy  Boeing

Poor diversification

The 3 months correlation between Orbital and Boeing is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Orbital Energy Group and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Orbital Energy 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 Orbital Energy Group are associated (or correlated) with Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of Orbital Energy i.e., Orbital Energy and Boeing go up and down completely randomly.

Pair Corralation between Orbital Energy and Boeing

If you would invest  0.03  in Orbital Energy Group on January 24, 2024 and sell it today you would earn a total of  0.00  from holding Orbital Energy Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

Orbital Energy Group  vs.  The Boeing

Orbital Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orbital Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Orbital Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Orbital Energy and Boeing

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

The idea behind Orbital Energy Group and The Boeing 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..