Correlation Between Aerojet Rocketdyne and Boeing

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Aerojet Rocketdyne 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 Aerojet Rocketdyne and Boeing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerojet Rocketdyne Holdings and Boeing Company, you can compare the effects of market volatilities on Aerojet Rocketdyne 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 Aerojet Rocketdyne with a short position of Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerojet Rocketdyne and Boeing.

Diversification Opportunities for Aerojet Rocketdyne and Boeing

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Aerojet and Boeing is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Aerojet Rocketdyne Holdings and Boeing Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing Company and Aerojet Rocketdyne 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 Aerojet Rocketdyne Holdings 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 Company has no effect on the direction of Aerojet Rocketdyne i.e., Aerojet Rocketdyne and Boeing go up and down completely randomly.

Pair Corralation between Aerojet Rocketdyne and Boeing

Given the investment horizon of 90 days Aerojet Rocketdyne is expected to generate 10.21 times less return on investment than Boeing. But when comparing it to its historical volatility, Aerojet Rocketdyne Holdings is 1.27 times less risky than Boeing. It trades about 0.04 of its potential returns per unit of risk. Boeing Company is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  13,699  in Boeing Company on May 11, 2022 and sell it today you would earn a total of  2,890  from holding Boeing Company or generate 21.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Aerojet Rocketdyne Holdings  vs.  Boeing Company

 Performance (%) 
       Timeline  
Aerojet Rocketdyne 
Aerojet Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aerojet Rocketdyne Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Aerojet Rocketdyne may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Aerojet Price Channel

Boeing Company 
Boeing Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Boeing Company are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Boeing Price Channel

Aerojet Rocketdyne and Boeing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aerojet Rocketdyne and Boeing

The main advantage of trading using opposite Aerojet Rocketdyne and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerojet Rocketdyne 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 Aerojet Rocketdyne Holdings and Boeing Company 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.
Check out your portfolio center. 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

Other Complementary Tools

Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Go
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Go
Money Managers
Screen money managers from public funds and ETFs managed around the world
Go
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Go