Correlation Between Elbit Systems and Boeing

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

Diversification Opportunities for Elbit Systems and Boeing

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Elbit and Boeing is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Boeing Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing Company and Elbit Systems 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 Elbit 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 Company has no effect on the direction of Elbit Systems i.e., Elbit Systems and Boeing go up and down completely randomly.

Pair Corralation between Elbit Systems and Boeing

Given the investment horizon of 90 days Elbit Systems is expected to under-perform the Boeing. But the stock apears to be less risky and, when comparing its historical volatility, Elbit Systems is 1.45 times less risky than Boeing. The stock trades about -0.08 of its potential returns per unit of risk. The Boeing Company is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  13,631  in Boeing Company on July 6, 2022 and sell it today you would lose (1,026)  from holding Boeing Company or give up 7.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Elbit Systems  vs.  Boeing Company

 Performance (%) 
       Timeline  
Elbit Systems 
Elbit Performance
0 of 100
Over the last 90 days Elbit Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Elbit Price Channel

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

Elbit Systems and Boeing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Elbit Systems and Boeing

The main advantage of trading using opposite Elbit Systems and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems 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.
Elbit Systems vs. Amazon Inc
The idea behind Elbit Systems 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.
Boeing vs. Amazon Inc
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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