Correlation Between Boeing and Big Lots

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Can any of the company-specific risk be diversified away by investing in both Boeing and Big Lots 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 Big Lots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Big Lots, you can compare the effects of market volatilities on Boeing and Big Lots 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 Big Lots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Big Lots.

Diversification Opportunities for Boeing and Big Lots

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Boeing and Big Lots is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Big Lots in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Lots 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 Big Lots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Lots has no effect on the direction of Boeing i.e., Boeing and Big Lots go up and down completely randomly.

Pair Corralation between Boeing and Big Lots

Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.39 times more return on investment than Big Lots. However, The Boeing is 2.56 times less risky than Big Lots. It trades about 0.35 of its potential returns per unit of risk. Big Lots is currently generating about 0.06 per unit of risk. If you would invest  15,675  in The Boeing on September 4, 2022 and sell it today you would earn a total of  2,612  from holding The Boeing or generate 16.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

The Boeing  vs.  Big Lots

 Performance (%) 
       Timeline  
Boeing 
Boeing Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Boeing Price Channel

Big Lots 
Big Lots Performance
0 of 100
Over the last 90 days Big Lots has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Big Lots Price Channel

Boeing and Big Lots Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Boeing and Big Lots

The main advantage of trading using opposite Boeing and Big Lots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Big Lots 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 Big Lots will offset losses from the drop in Big Lots' long position.
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The idea behind The Boeing and Big Lots 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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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 Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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