Correlation Between KWESST Micro and Boeing

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

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

Diversification Opportunities for KWESST Micro and Boeing

0.52

Correlation Coefficient

KWESST Micro  Boeing

Very weak diversification

The 3 months correlation between KWESST and Boeing is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding KWESST Micro Systems and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and KWESST Micro 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 KWESST Micro Systems 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 KWESST Micro i.e., KWESST Micro and Boeing go up and down completely randomly.

Pair Corralation between KWESST Micro and Boeing

Assuming the 90 days horizon KWESST Micro Systems is expected to generate 188.05 times more return on investment than Boeing. However, KWESST Micro is 188.05 times more volatile than The Boeing. It trades about 0.51 of its potential returns per unit of risk. The Boeing is currently generating about -0.12 per unit of risk. If you would invest  0.00  in KWESST Micro Systems on June 9, 2024 and sell it today you would earn a total of  2.01  from holding KWESST Micro Systems or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	72.73%
Values	Daily Returns

KWESST Micro Systems  vs.  The Boeing

KWESST Micro Systems

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KWESST Micro Systems are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, KWESST Micro showed solid returns over the last few months and may actually be approaching a breakup point.

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 abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in October 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KWESST Micro and Boeing

The main advantage of trading using opposite KWESST Micro and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KWESST Micro 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 KWESST Micro Systems 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .