Correlation Between FibraHotel and Boeing

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

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

Diversification Opportunities for FibraHotel and Boeing

0.55

Correlation Coefficient

FibraHotel  Boeing

Very weak diversification

The 3 months correlation between FibraHotel and Boeing is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding FibraHotel and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and FibraHotel 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 FibraHotel 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 FibraHotel i.e., FibraHotel and Boeing go up and down completely randomly.

Pair Corralation between FibraHotel and Boeing

Assuming the 90 days trading horizon FibraHotel is expected to generate 2.7 times more return on investment than Boeing. However, FibraHotel is 2.7 times more volatile than The Boeing. It trades about 0.18 of its potential returns per unit of risk. The Boeing is currently generating about 0.45 per unit of risk. If you would invest  873.00  in FibraHotel on September 25, 2024 and sell it today you would earn a total of  124.00  from holding FibraHotel or generate 14.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

FibraHotel  vs.  The Boeing

FibraHotel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FibraHotel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, FibraHotel sustained solid returns over the last few months and may actually be approaching a breakup point.

Boeing

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Boeing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FibraHotel and Boeing

The main advantage of trading using opposite FibraHotel and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FibraHotel 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 FibraHotel 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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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.