Correlation Between Boeing and FLOWERS

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

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

Diversification Opportunities for Boeing and FLOWERS

-0.49

Correlation Coefficient

Boeing  FLOWERS

Very good diversification

The 3 months correlation between Boeing and FLOWERS is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and FLOWERS FOODS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOWERS FOODS INC 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 FLOWERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOWERS FOODS INC has no effect on the direction of Boeing i.e., Boeing and FLOWERS go up and down completely randomly.

Pair Corralation between Boeing and FLOWERS

Allowing for the 90-day total investment horizon The Boeing is expected to generate 2.61 times more return on investment than FLOWERS. However, Boeing is 2.61 times more volatile than FLOWERS FOODS INC. It trades about 0.08 of its potential returns per unit of risk. FLOWERS FOODS INC is currently generating about -0.15 per unit of risk. If you would invest  15,555  in The Boeing on September 16, 2024 and sell it today you would earn a total of  1,410  from holding The Boeing or generate 9.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	64.62%
Values	Daily Returns

The Boeing  vs.  FLOWERS FOODS INC

Boeing

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FLOWERS FOODS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FLOWERS FOODS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for FLOWERS FOODS INC investors.

Pair Trading with Boeing and FLOWERS

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

The idea behind The Boeing and FLOWERS FOODS INC 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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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.