Correlation Between Stepan and Boston Omaha
Can any of the company-specific risk be diversified away by investing in both Stepan and Boston Omaha 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 Stepan and Boston Omaha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Boston Omaha Corp, you can compare the effects of market volatilities on Stepan and Boston Omaha 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 Stepan with a short position of Boston Omaha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Boston Omaha.
Diversification Opportunities for Stepan and Boston Omaha
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stepan and Boston is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Boston Omaha Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Omaha Corp and Stepan 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 Stepan Company are associated (or correlated) with Boston Omaha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Omaha Corp has no effect on the direction of Stepan i.e., Stepan and Boston Omaha go up and down completely randomly.
Pair Corralation between Stepan and Boston Omaha
Considering the 90-day investment horizon Stepan Company is expected to under-perform the Boston Omaha. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 1.37 times less risky than Boston Omaha. The stock trades about -0.07 of its potential returns per unit of risk. The Boston Omaha Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. 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 |
Stepan Company vs. Boston Omaha Corp
Performance |
| Timeline |
| Stepan Company |
| Boston Omaha Corp |
Stepan and Boston Omaha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Boston Omaha
The main advantage of trading using opposite Stepan and Boston Omaha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Boston Omaha 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 Boston Omaha will offset losses from the drop in Boston Omaha's long position.| Stepan vs. LyondellBasell Industries NV | Stepan vs. International Flavors Fragrances | Stepan vs. Cabot | Stepan vs. Westlake Chemical |
| Boston Omaha vs. Mirriad Advertising plc | Boston Omaha vs. INEO Tech Corp | Boston Omaha vs. Kidoz Inc | Boston Omaha vs. Marchex |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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