Correlation Between Boeing and Focus Financial

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

Diversification Opportunities for Boeing and Focus Financial

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Boeing and Focus is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Focus Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Financial Partners 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 Focus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Financial Partners has no effect on the direction of Boeing i.e., Boeing and Focus Financial go up and down completely randomly.

Pair Corralation between Boeing and Focus Financial

Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.52 times more return on investment than Focus Financial. However, The Boeing is 1.92 times less risky than Focus Financial. It trades about 0.42 of its potential returns per unit of risk. Focus Financial Partners is currently generating about 0.15 per unit of risk. If you would invest  14,741  in The Boeing on September 3, 2022 and sell it today you would earn a total of  3,546  from holding The Boeing or generate 24.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

The Boeing  vs.  Focus Financial Partners

 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 unsteady basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Boeing Price Channel

Focus Financial Partners 
Focus Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Focus Financial Partners are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Focus Financial may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Focus Price Channel

Boeing and Focus Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Boeing and Focus Financial

The main advantage of trading using opposite Boeing and Focus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Focus Financial 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 Focus Financial will offset losses from the drop in Focus Financial's long position.
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The idea behind The Boeing and Focus Financial Partners 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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