Correlation Between Boise Cascad and American Express
Can any of the company-specific risk be diversified away by investing in both Boise Cascad and American Express 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 Boise Cascad and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boise Cascad Llc and American Express, you can compare the effects of market volatilities on Boise Cascad and American Express 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 Boise Cascad with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boise Cascad and American Express.
Diversification Opportunities for Boise Cascad and American Express
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Boise and American is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Boise Cascad Llc and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Boise Cascad 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 Boise Cascad Llc are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Boise Cascad i.e., Boise Cascad and American Express go up and down completely randomly.
Pair Corralation between Boise Cascad and American Express
Considering the 90-day investment horizon Boise Cascad Llc is expected to under-perform the American Express. In addition to that, Boise Cascad is 1.26 times more volatile than American Express. It trades about -0.16 of its total potential returns per unit of risk. American Express is currently generating about 0.17 per unit of volatility. If you would invest 22,533 in American Express on January 24, 2024 and sell it today you would earn a total of 1,363 from holding American Express or generate 6.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Boise Cascad Llc vs. American Express
Performance |
Timeline |
Boise Cascad Llc |
American Express |
Boise Cascad and American Express Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Boise Cascad and American Express
The main advantage of trading using opposite Boise Cascad and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boise Cascad position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.Boise Cascad vs. Eagle Materials | Boise Cascad vs. Cementos Pacasmayo SAA | Boise Cascad vs. James Hardie Industries | Boise Cascad vs. United States Lime |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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