Correlation Between Boeing and Woodward

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

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

Diversification Opportunities for Boeing and Woodward

0.84

Correlation Coefficient

Boeing  Woodward

Very poor diversification

The 3 months correlation between Boeing and Woodward is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Woodward in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodward 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 Woodward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodward has no effect on the direction of Boeing i.e., Boeing and Woodward go up and down completely randomly.

Pair Corralation between Boeing and Woodward

Allowing for the 90-day total investment horizon Boeing is expected to generate 1.55 times less return on investment than Woodward. In addition to that, Boeing is 1.17 times more volatile than Woodward. It trades about 0.17 of its total potential returns per unit of risk. Woodward is currently generating about 0.31 per unit of volatility. If you would invest  19,582  in Woodward on May 6, 2025 and sell it today you would earn a total of  6,347  from holding Woodward or generate 32.41% return on investment over 90 days.

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

The Boeing  vs.  Woodward

Boeing

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Woodward

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Woodward are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Woodward exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boeing and Woodward

The main advantage of trading using opposite Boeing and Woodward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Woodward 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 Woodward will offset losses from the drop in Woodward's long position.

The idea behind The Boeing and Woodward 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..