Correlation Between Textron and Boeing
Can any of the company-specific risk be diversified away by investing in both Textron 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 Textron and Boeing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Textron and The Boeing, you can compare the effects of market volatilities on Textron 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 Textron with a short position of Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Textron and Boeing.
Diversification Opportunities for Textron and Boeing
Poor diversification
The 3 months correlation between Textron and Boeing is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Textron and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Textron 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 Textron 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 Textron i.e., Textron and Boeing go up and down completely randomly.
Pair Corralation between Textron and Boeing
Considering the 90-day investment horizon Textron is expected to generate 1.75 times less return on investment than Boeing. In addition to that, Textron is 1.39 times more volatile than The Boeing. It trades about 0.12 of its total potential returns per unit of risk. The Boeing is currently generating about 0.3 per unit of volatility. If you would invest 19,485 in The Boeing on March 10, 2025 and sell it today you would earn a total of 1,595 from holding The Boeing or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Textron vs. The Boeing
Performance |
| Timeline |
| Textron |
| Boeing |
Textron and Boeing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Textron and Boeing
The main advantage of trading using opposite Textron and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Textron 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.| Textron vs. Hexcel | Textron vs. Huntington Ingalls Industries | Textron vs. Curtiss Wright | Textron vs. Mercury Systems |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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