Correlation Between AVITA Medical and Boise Cascade

Can any of the company-specific risk be diversified away by investing in both AVITA Medical 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 AVITA Medical and Boise Cascade into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AVITA Medical and Boise Cascade, you can compare the effects of market volatilities on AVITA Medical 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 AVITA Medical with a short position of Boise Cascade. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and Boise Cascade.

Diversification Opportunities for AVITA Medical and Boise Cascade

0.33

Correlation Coefficient

AVITA Medical  Boise Cascade

Weak diversification

The 3 months correlation between AVITA and Boise is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and Boise Cascade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boise Cascade and AVITA Medical 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 AVITA Medical 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 AVITA Medical i.e., AVITA Medical and Boise Cascade go up and down completely randomly.

Pair Corralation between AVITA Medical and Boise Cascade

Assuming the 90 days trading horizon AVITA Medical is expected to generate 2.11 times more return on investment than Boise Cascade. However, AVITA Medical is 2.11 times more volatile than Boise Cascade. It trades about 0.14 of its potential returns per unit of risk. Boise Cascade is currently generating about -0.18 per unit of risk. If you would invest  208.00  in AVITA Medical on October 9, 2024 and sell it today you would earn a total of  40.00  from holding AVITA Medical or generate 19.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AVITA Medical  vs.  Boise Cascade

AVITA Medical

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AVITA Medical are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking signals, AVITA Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Boise Cascade

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boise Cascade has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with AVITA Medical and Boise Cascade

The main advantage of trading using opposite AVITA Medical and Boise Cascade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical 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.

The idea behind AVITA Medical and Boise Cascade pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.