Correlation Between FactSet Research and Boeing

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

Diversification Opportunities for FactSet Research and Boeing

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between FactSet and Boeing is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and FactSet Research 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 FactSet Research 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 has no effect on the direction of FactSet Research i.e., FactSet Research and Boeing go up and down completely randomly.

Pair Corralation between FactSet Research and Boeing

Considering the 90-day investment horizon FactSet Research Systems is expected to generate 0.6 times more return on investment than Boeing. However, FactSet Research Systems is 1.66 times less risky than Boeing. It trades about 0.05 of its potential returns per unit of risk. The Boeing is currently generating about 0.0 per unit of risk. If you would invest  33,893  in FactSet Research Systems on September 5, 2022 and sell it today you would earn a total of  13,222  from holding FactSet Research Systems or generate 39.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

FactSet Research Systems  vs.  The Boeing

 Performance (%) 
       Timeline  
FactSet Research Systems 
FactSet Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in FactSet Research Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish fundamental indicators, FactSet Research may actually be approaching a critical reversion point that can send shares even higher in January 2023.

FactSet Price Channel

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

Boeing Price Channel

FactSet Research and Boeing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FactSet Research and Boeing

The main advantage of trading using opposite FactSet Research and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FactSet Research 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.
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The idea behind FactSet Research Systems and The Boeing 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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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