Correlation Between Boeing and MDU Resources

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

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

Diversification Opportunities for Boeing and MDU Resources

-0.55

Correlation Coefficient

Boeing  MDU Resources

Excellent diversification

The 3 months correlation between Boeing and MDU is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and MDU Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDU Resources Group 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 MDU Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDU Resources Group has no effect on the direction of Boeing i.e., Boeing and MDU Resources go up and down completely randomly.

Pair Corralation between Boeing and MDU Resources

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the MDU Resources. In addition to that, Boeing is 1.61 times more volatile than MDU Resources Group. It trades about -0.09 of its total potential returns per unit of risk. MDU Resources Group is currently generating about 0.2 per unit of volatility. If you would invest  2,172  in MDU Resources Group on March 4, 2024 and sell it today you would earn a total of  352.00  from holding MDU Resources Group or generate 16.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

The Boeing  vs.  MDU Resources Group

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.

MDU Resources Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MDU Resources Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, MDU Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boeing and MDU Resources

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

The idea behind The Boeing and MDU Resources Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.