Correlation Between Huntington Ingalls and Boeing

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

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

Diversification Opportunities for Huntington Ingalls and Boeing

0.09

Correlation Coefficient

Huntington Ingalls  Boeing

Significant diversification

The 3 months correlation between Huntington and Boeing is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Ingalls Industries and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Huntington Ingalls 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 Huntington Ingalls Industries 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 Huntington Ingalls i.e., Huntington Ingalls and Boeing go up and down completely randomly.

Pair Corralation between Huntington Ingalls and Boeing

Considering the 90-day investment horizon Huntington Ingalls Industries is expected to generate 0.69 times more return on investment than Boeing. However, Huntington Ingalls Industries is 1.45 times less risky than Boeing. It trades about 0.04 of its potential returns per unit of risk. The Boeing is currently generating about -0.02 per unit of risk. If you would invest  23,222  in Huntington Ingalls Industries on February 4, 2024 and sell it today you would earn a total of  1,401  from holding Huntington Ingalls Industries or generate 6.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Huntington Ingalls Industries  vs.  The Boeing

Huntington Ingalls

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huntington Ingalls Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Huntington Ingalls is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Boeing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Huntington Ingalls and Boeing

The main advantage of trading using opposite Huntington Ingalls and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Ingalls 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 Huntington Ingalls Industries 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 Valuation module to check real value of public entities based on technical and fundamental data.