Correlation Between Boeing and Franklin Exponential

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

Diversification Opportunities for Boeing and Franklin Exponential

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Boeing and Franklin is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Boeing Company and Franklin Exponential Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Exponential Data 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 Boeing Company are associated (or correlated) with Franklin Exponential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Exponential Data has no effect on the direction of Boeing i.e., Boeing and Franklin Exponential go up and down completely randomly.

Pair Corralation between Boeing and Franklin Exponential

Allowing for the 90-day total investment horizon Boeing Company is expected to generate 1.2 times more return on investment than Franklin Exponential. However, Boeing is 1.2 times more volatile than Franklin Exponential Data. It trades about 0.0 of its potential returns per unit of risk. Franklin Exponential Data is currently generating about -0.04 per unit of risk. If you would invest  16,733  in Boeing Company on July 1, 2022 and sell it today you would lose (3,389)  from holding Boeing Company or give up 20.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy86.72%
ValuesDaily Returns

Boeing Company  vs.  Franklin Exponential Data

 Performance (%) 
       Timeline  
Boeing Company 
Boeing Performance
0 of 100
Over the last 90 days Boeing Company 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Boeing Price Channel

Franklin Exponential Data 
Franklin Performance
0 of 100
Over the last 90 days Franklin Exponential Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Franklin Exponential is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Franklin Price Channel

Boeing and Franklin Exponential Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Boeing and Franklin Exponential

The main advantage of trading using opposite Boeing and Franklin Exponential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Franklin Exponential 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 Franklin Exponential will offset losses from the drop in Franklin Exponential's long position.
Boeing vs. Amazon Inc
The idea behind Boeing Company and Franklin Exponential Data 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.
Franklin Exponential vs. Merck Company
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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