Correlation Between Nasdaq and Boeing

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

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

Diversification Opportunities for Nasdaq and Boeing

-0.66

Correlation Coefficient

Nasdaq  Boeing

Excellent diversification

The 3 months correlation between Nasdaq and Boeing is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Boeing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Nasdaq 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 Nasdaq 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 has no effect on the direction of Nasdaq i.e., Nasdaq and Boeing go up and down completely randomly.

Pair Corralation between Nasdaq and Boeing

Given the investment horizon of 90 days Nasdaq is expected to generate 5.56 times less return on investment than Boeing. But when comparing it to its historical volatility, Nasdaq Inc is 1.05 times less risky than Boeing. It trades about 0.05 of its potential returns per unit of risk. Boeing Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  5,415  in Boeing Co on September 23, 2024 and sell it today you would earn a total of  750.00  from holding Boeing Co or generate 13.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	7.85%
Values	Daily Returns

Nasdaq Inc  vs.  Boeing Co

Nasdaq Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Boeing

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boeing Co are ranked lower than 18 (%) 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.

Pair Trading with Nasdaq and Boeing

The main advantage of trading using opposite Nasdaq and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc and Boeing Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.