Correlation Between Boise Cascad and Knife River

Can any of the company-specific risk be diversified away by investing in both Boise Cascad and Knife River 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 Knife River 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 Knife River, you can compare the effects of market volatilities on Boise Cascad and Knife River 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 Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boise Cascad and Knife River.

Diversification Opportunities for Boise Cascad and Knife River

0.91

Correlation Coefficient

Boise Cascad  Knife River

Almost no diversification

The 3 months correlation between Boise and Knife is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Boise Cascad Llc and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River 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 Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of Boise Cascad i.e., Boise Cascad and Knife River go up and down completely randomly.

Pair Corralation between Boise Cascad and Knife River

Considering the 90-day investment horizon Boise Cascad Llc is expected to under-perform the Knife River. But the stock apears to be less risky and, when comparing its historical volatility, Boise Cascad Llc is 1.41 times less risky than Knife River. The stock trades about -0.14 of its potential returns per unit of risk. The Knife River is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  10,297  in Knife River on December 27, 2024 and sell it today you would lose (1,013) from holding Knife River or give up 9.84% of portfolio value over 90 days.

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

Boise Cascad Llc  vs.  Knife River

Boise Cascad Llc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boise Cascad Llc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Knife River

Risk-Adjusted Performance

Very Weak

Over the last 90 days Knife River has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent 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 Boise Cascad and Knife River

The main advantage of trading using opposite Boise Cascad and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boise Cascad position performs unexpectedly, Knife River 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 Knife River will offset losses from the drop in Knife River's long position.

The idea behind Boise Cascad Llc and Knife River 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.