Correlation Between Aluminumof China and Boise Cascade
Can any of the company-specific risk be diversified away by investing in both Aluminumof China 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 Aluminumof China and Boise Cascade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and Boise Cascade, you can compare the effects of market volatilities on Aluminumof China 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 Aluminumof China with a short position of Boise Cascade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Boise Cascade.
Diversification Opportunities for Aluminumof China and Boise Cascade
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aluminumof and Boise is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and Boise Cascade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boise Cascade and Aluminumof China 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 Aluminum of 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 Aluminumof China i.e., Aluminumof China and Boise Cascade go up and down completely randomly.
Pair Corralation between Aluminumof China and Boise Cascade
Assuming the 90 days horizon Aluminum of is expected to generate 2.01 times more return on investment than Boise Cascade. However, Aluminumof China is 2.01 times more volatile than Boise Cascade. It trades about 0.14 of its potential returns per unit of risk. Boise Cascade is currently generating about 0.02 per unit of risk. If you would invest 50.00 in Aluminum of on September 15, 2024 and sell it today you would earn a total of 5.00 from holding Aluminum of or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. Boise Cascade
Performance |
| Timeline |
| Aluminumof China |
| Boise Cascade |
Aluminumof China and Boise Cascade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and Boise Cascade
The main advantage of trading using opposite Aluminumof China and Boise Cascade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China 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.| Aluminumof China vs. Norsk Hydro ASA | Aluminumof China vs. Kaiser Aluminum | Aluminumof China vs. Superior Plus Corp | Aluminumof China vs. SIVERS SEMICONDUCTORS AB |
| Boise Cascade vs. Aluminum of | Boise Cascade vs. SLR Investment Corp | Boise Cascade vs. New Residential Investment | Boise Cascade vs. HK Electric Investments |
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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