Correlation Between Knife River and Boise Cascad
Can any of the company-specific risk be diversified away by investing in both Knife River and Boise Cascad 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 Knife River and Boise Cascad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Boise Cascad Llc, you can compare the effects of market volatilities on Knife River and Boise Cascad 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 Knife River with a short position of Boise Cascad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Boise Cascad.
Diversification Opportunities for Knife River and Boise Cascad
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Knife and Boise is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Boise Cascad Llc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boise Cascad Llc and Knife River 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 Knife River are associated (or correlated) with Boise Cascad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boise Cascad Llc has no effect on the direction of Knife River i.e., Knife River and Boise Cascad go up and down completely randomly.
Pair Corralation between Knife River and Boise Cascad
Considering the 90-day investment horizon Knife River is expected to generate 0.86 times more return on investment than Boise Cascad. However, Knife River is 1.16 times less risky than Boise Cascad. It trades about 0.11 of its potential returns per unit of risk. Boise Cascad Llc is currently generating about 0.04 per unit of risk. If you would invest 6,549 in Knife River on August 28, 2024 and sell it today you would earn a total of 3,857 from holding Knife River or generate 58.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knife River vs. Boise Cascad Llc
Performance |
| Timeline |
| Knife River |
| Boise Cascad Llc |
Knife River and Boise Cascad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Boise Cascad
The main advantage of trading using opposite Knife River and Boise Cascad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Boise Cascad 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 Cascad will offset losses from the drop in Boise Cascad's long position.| Knife River vs. Cemex SAB de | Knife River vs. Boise Cascad Llc | Knife River vs. CRH PLC ADR | Knife River vs. Eagle Materials |
| Boise Cascad vs. Eagle Materials | Boise Cascad vs. Cementos Pacasmayo SAA | Boise Cascad vs. James Hardie Industries | Boise Cascad vs. United States Lime |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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