Correlation Between THAI BEVERAGE and Boise Cascade
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE 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 THAI BEVERAGE and Boise Cascade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and Boise Cascade, you can compare the effects of market volatilities on THAI BEVERAGE 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 THAI BEVERAGE with a short position of Boise Cascade. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Boise Cascade.
Diversification Opportunities for THAI BEVERAGE and Boise Cascade
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between THAI and Boise is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Boise Cascade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boise Cascade and THAI BEVERAGE 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 THAI BEVERAGE 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 THAI BEVERAGE i.e., THAI BEVERAGE and Boise Cascade go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and Boise Cascade
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 2.02 times more return on investment than Boise Cascade. However, THAI BEVERAGE is 2.02 times more volatile than Boise Cascade. It trades about 0.06 of its potential returns per unit of risk. Boise Cascade is currently generating about 0.07 per unit of risk. If you would invest 15.00 in THAI BEVERAGE on September 14, 2024 and sell it today you would earn a total of 23.00 from holding THAI BEVERAGE or generate 153.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THAI BEVERAGE vs. Boise Cascade
Performance |
| Timeline |
| THAI BEVERAGE |
| Boise Cascade |
THAI BEVERAGE and Boise Cascade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and Boise Cascade
The main advantage of trading using opposite THAI BEVERAGE and Boise Cascade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE 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.| THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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