Correlation Between Boeing and Crestwood Equity

Can any of the company-specific risk be diversified away by investing in both Boeing and Crestwood Equity 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 Crestwood Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Boeing and Crestwood Equity Partners, you can compare the effects of market volatilities on Boeing and Crestwood Equity 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 Crestwood Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Crestwood Equity.

Diversification Opportunities for Boeing and Crestwood Equity

-0.52

Correlation Coefficient

Boeing  Crestwood Equity

Excellent diversification

The 3 months correlation between Boeing and Crestwood is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Crestwood Equity Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crestwood Equity 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 Crestwood Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crestwood Equity Partners has no effect on the direction of Boeing i.e., Boeing and Crestwood Equity go up and down completely randomly.

Pair Corralation between Boeing and Crestwood Equity

If you would invest  2,942  in Crestwood Equity Partners on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Crestwood Equity Partners or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

The Boeing  vs.  Crestwood Equity Partners

Boeing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Boeing 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.

Crestwood Equity Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crestwood Equity Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Crestwood Equity is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Boeing and Crestwood Equity

The main advantage of trading using opposite Boeing and Crestwood Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Crestwood Equity 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 Crestwood Equity will offset losses from the drop in Crestwood Equity's long position.

The idea behind The Boeing and Crestwood Equity 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.

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 the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.