Correlation Between New Residential and Boise Cascade
Can any of the company-specific risk be diversified away by investing in both New Residential and Boise Cascade 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 New Residential and Boise Cascade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and Boise Cascade, you can compare the effects of market volatilities on New Residential and Boise Cascade 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 New Residential with a short position of Boise Cascade. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Boise Cascade.
Diversification Opportunities for New Residential and Boise Cascade
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Boise is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Boise Cascade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boise Cascade and New Residential 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 New Residential Investment are associated (or correlated) with Boise Cascade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boise Cascade has no effect on the direction of New Residential i.e., New Residential and Boise Cascade go up and down completely randomly.
Pair Corralation between New Residential and Boise Cascade
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.86 times more return on investment than Boise Cascade. However, New Residential Investment is 1.17 times less risky than Boise Cascade. It trades about 0.35 of its potential returns per unit of risk. Boise Cascade is currently generating about 0.09 per unit of risk. If you would invest 1,005 in New Residential Investment on October 20, 2024 and sell it today you would earn a total of 86.00 from holding New Residential Investment or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Boise Cascade
Performance |
| Timeline |
| New Residential Inve |
| Boise Cascade |
New Residential and Boise Cascade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Boise Cascade
The main advantage of trading using opposite New Residential and Boise Cascade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Boise Cascade 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 Boise Cascade will offset losses from the drop in Boise Cascade's long position.| New Residential vs. ANTA SPORTS PRODUCT | New Residential vs. X FAB Silicon Foundries | New Residential vs. TRI CHEMICAL LABORATINC | New Residential vs. GREENX METALS LTD |
| Boise Cascade vs. Svenska Cellulosa Aktiebolaget | Boise Cascade vs. West Fraser Timber | Boise Cascade vs. UFP Industries | Boise Cascade vs. Rayonier |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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