Correlation Between IPC MEXICO and Boeing

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

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

Diversification Opportunities for IPC MEXICO and Boeing

-0.11

Correlation Coefficient

IPC MEXICO  Boeing

Good diversification

The 3 months correlation between IPC and Boeing is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and IPC MEXICO 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 IPC MEXICO 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 IPC MEXICO i.e., IPC MEXICO and Boeing go up and down completely randomly.

Pair Corralation between IPC MEXICO and Boeing

Assuming the 90 days trading horizon IPC MEXICO is expected to generate 0.44 times more return on investment than Boeing. However, IPC MEXICO is 2.29 times less risky than Boeing. It trades about 0.01 of its potential returns per unit of risk. The Boeing is currently generating about 0.0 per unit of risk. If you would invest  5,004,770  in IPC MEXICO on September 4, 2024 and sell it today you would earn a total of  38,484  from holding IPC MEXICO or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.03%
Values	Daily Returns

IPC MEXICO  vs.  The Boeing

Pair Trading with IPC MEXICO and Boeing

The main advantage of trading using opposite IPC MEXICO and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPC MEXICO 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 IPC MEXICO 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.