Correlation Between ATT and Boeing

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

Diversification Opportunities for ATT and Boeing

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between ATT and Boeing is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Boeing Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing Company and ATT 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 ATT Inc 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 ATT i.e., ATT and Boeing go up and down completely randomly.

Pair Corralation between ATT and Boeing

Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the Boeing. But the stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 1.7 times less risky than Boeing. The stock trades about -0.15 of its potential returns per unit of risk. The Boeing Company is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  12,700  in Boeing Company on May 11, 2022 and sell it today you would earn a total of  3,785  from holding Boeing Company or generate 29.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

ATT Inc  vs.  Boeing Company

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

ATT Price Channel

Boeing Company 
Boeing Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Boeing Company are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Boeing Price Channel

ATT and Boeing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and Boeing

The main advantage of trading using opposite ATT and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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.
The idea behind ATT Inc 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.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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