Correlation Between Boeing and Hexcel
Can any of the company-specific risk be diversified away by investing in both Boeing and Hexcel 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 Hexcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Hexcel, you can compare the effects of market volatilities on Boeing and Hexcel 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 Hexcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Hexcel.
Diversification Opportunities for Boeing and Hexcel
Modest diversification
The 3 months correlation between Boeing and Hexcel is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Hexcel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel 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 Hexcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel has no effect on the direction of Boeing i.e., Boeing and Hexcel go up and down completely randomly.
Pair Corralation between Boeing and Hexcel
Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.97 times more return on investment than Hexcel. However, The Boeing is 1.03 times less risky than Hexcel. It trades about 0.32 of its potential returns per unit of risk. Hexcel is currently generating about 0.09 per unit of risk. If you would invest 15,928 in The Boeing on March 15, 2025 and sell it today you would earn a total of 4,447 from holding The Boeing or generate 27.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Hexcel
Performance |
| Timeline |
| Boeing |
| Hexcel |
Boeing and Hexcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Hexcel
The main advantage of trading using opposite Boeing and Hexcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Hexcel 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 Hexcel will offset losses from the drop in Hexcel's long position.The idea behind The Boeing and Hexcel 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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