Correlation Between Boston Omaha and Stepan
Can any of the company-specific risk be diversified away by investing in both Boston Omaha and Stepan 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 Boston Omaha and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Omaha Corp and Stepan Company, you can compare the effects of market volatilities on Boston Omaha and Stepan 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 Boston Omaha with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Omaha and Stepan.
Diversification Opportunities for Boston Omaha and Stepan
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Boston and Stepan is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Boston Omaha Corp and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Boston Omaha 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 Boston Omaha Corp are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Boston Omaha i.e., Boston Omaha and Stepan go up and down completely randomly.
Pair Corralation between Boston Omaha and Stepan
Considering the 90-day investment horizon Boston Omaha Corp is expected to generate 1.37 times more return on investment than Stepan. However, Boston Omaha is 1.37 times more volatile than Stepan Company. It trades about -0.05 of its potential returns per unit of risk. Stepan Company is currently generating about -0.07 per unit of risk. If you would invest 1,575 in Boston Omaha Corp on September 13, 2024 and sell it today you would lose (29.50) from holding Boston Omaha Corp or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Omaha Corp vs. Stepan Company
Performance |
| Timeline |
| Boston Omaha Corp |
| Stepan Company |
Boston Omaha and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Omaha and Stepan
The main advantage of trading using opposite Boston Omaha and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Omaha position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Boston Omaha vs. Mirriad Advertising plc | Boston Omaha vs. INEO Tech Corp | Boston Omaha vs. Kidoz Inc | Boston Omaha vs. Marchex |
| Stepan vs. LyondellBasell Industries NV | Stepan vs. International Flavors Fragrances | Stepan vs. Cabot | Stepan vs. Westlake Chemical |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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