Correlation Between Boeing and Hennessy Cornerstone

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

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

Diversification Opportunities for Boeing and Hennessy Cornerstone

-0.61

Correlation Coefficient

Boeing  Hennessy Cornerstone

Excellent diversification

The 3 months correlation between Boeing and HENNESSY is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Hennessy Nerstone Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Mid 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 Hennessy Cornerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Mid has no effect on the direction of Boeing i.e., Boeing and Hennessy Cornerstone go up and down completely randomly.

Pair Corralation between Boeing and Hennessy Cornerstone

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Hennessy Cornerstone. In addition to that, Boeing is 1.89 times more volatile than Hennessy Nerstone Mid. It trades about -0.01 of its total potential returns per unit of risk. Hennessy Nerstone Mid is currently generating about 0.3 per unit of volatility. If you would invest  2,810  in Hennessy Nerstone Mid on August 31, 2024 and sell it today you would earn a total of  231.00  from holding Hennessy Nerstone Mid or generate 8.22% return on investment over 90 days.

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

The Boeing  vs.  Hennessy Nerstone Mid

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 somewhat strong basic indicators, Boeing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hennessy Nerstone Mid

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Nerstone Mid are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Hennessy Cornerstone showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boeing and Hennessy Cornerstone

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

The idea behind The Boeing and Hennessy Nerstone Mid 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.