Correlation Between Boeing and IShares Ultra

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

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

Diversification Opportunities for Boeing and IShares Ultra

-0.7

Correlation Coefficient

Boeing  IShares Ultra

Excellent diversification

The 3 months correlation between Boeing and IShares is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and iShares Ultra Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Ultra Short 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 IShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Ultra Short has no effect on the direction of Boeing i.e., Boeing and IShares Ultra go up and down completely randomly.

Pair Corralation between Boeing and IShares Ultra

Allowing for the 90-day total investment horizon Boeing is expected to generate 24.75 times less return on investment than IShares Ultra. In addition to that, Boeing is 8.87 times more volatile than iShares Ultra Short Term. It trades about 0.0 of its total potential returns per unit of risk. iShares Ultra Short Term is currently generating about 0.1 per unit of volatility. If you would invest  5,005  in iShares Ultra Short Term on February 20, 2024 and sell it today you would earn a total of  42.50  from holding iShares Ultra Short Term or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.67%
Values	Daily Returns

The Boeing  vs.  iShares Ultra Short Term

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 latest unsteady 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.

iShares Ultra Short

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ultra Short Term are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IShares Ultra is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Boeing and IShares Ultra

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

The idea behind The Boeing and iShares Ultra Short Term 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.