Correlation Between STELLA JONES and Boise Cascade

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

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

Diversification Opportunities for STELLA JONES and Boise Cascade

-0.54

Correlation Coefficient

STELLA JONES  Boise Cascade

Excellent diversification

The 3 months correlation between STELLA and Boise is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding STELLA JONES INC and Boise Cascade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boise Cascade and STELLA JONES 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 STELLA JONES INC 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 STELLA JONES i.e., STELLA JONES and Boise Cascade go up and down completely randomly.

Pair Corralation between STELLA JONES and Boise Cascade

Assuming the 90 days horizon STELLA JONES INC is expected to generate 1.11 times more return on investment than Boise Cascade. However, STELLA JONES is 1.11 times more volatile than Boise Cascade. It trades about 0.03 of its potential returns per unit of risk. Boise Cascade is currently generating about -0.35 per unit of risk. If you would invest  4,672  in STELLA JONES INC on September 24, 2024 and sell it today you would earn a total of  48.00  from holding STELLA JONES INC or generate 1.03% return on investment over 90 days.

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

STELLA JONES INC  vs.  Boise Cascade

STELLA JONES INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STELLA JONES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 nearly stable basic indicators, Boise Cascade is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with STELLA JONES and Boise Cascade

The main advantage of trading using opposite STELLA JONES and Boise Cascade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STELLA JONES 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 STELLA JONES INC 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.