Correlation Between Twitter and Boeing

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

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

Diversification Opportunities for Twitter and Boeing

-0.69

Correlation Coefficient

Twitter  Boeing

Excellent diversification

The 3 months correlation between Twitter and Boeing is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Twitter and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Twitter 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 Twitter 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 Twitter i.e., Twitter and Boeing go up and down completely randomly.

Pair Corralation between Twitter and Boeing

If you would invest  5,370  in Twitter on January 24, 2024 and sell it today you would earn a total of  0.00  from holding Twitter or generate 0.0% return on investment over 90 days.

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

Twitter  vs.  The Boeing

Twitter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twitter has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Twitter is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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 Twitter and Boeing

The main advantage of trading using opposite Twitter and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twitter 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 Twitter 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.