Correlation Between Boston Omaha and Custom Truck

Can any of the company-specific risk be diversified away by investing in both Boston Omaha and Custom Truck 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 Boston Omaha and Custom Truck into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boston Omaha Corp and Custom Truck One, you can compare the effects of market volatilities on Boston Omaha and Custom Truck 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 Boston Omaha with a short position of Custom Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Omaha and Custom Truck.

Diversification Opportunities for Boston Omaha and Custom Truck

0.18

Correlation Coefficient

Boston Omaha  Custom Truck

Average diversification

The 3 months correlation between Boston and Custom is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Boston Omaha Corp and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One and Boston Omaha 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 Boston Omaha Corp are associated (or correlated) with Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of Boston Omaha i.e., Boston Omaha and Custom Truck go up and down completely randomly.

Pair Corralation between Boston Omaha and Custom Truck

Considering the 90-day investment horizon Boston Omaha Corp is expected to under-perform the Custom Truck. But the stock apears to be less risky and, when comparing its historical volatility, Boston Omaha Corp is 1.56 times less risky than Custom Truck. The stock trades about -0.06 of its potential returns per unit of risk. The Custom Truck One is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  659.00  in Custom Truck One on October 10, 2024 and sell it today you would lose (198.00) from holding Custom Truck One or give up 30.05% of portfolio value over 90 days.

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

Boston Omaha Corp  vs.  Custom Truck One

Boston Omaha Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Omaha Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Boston Omaha is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Custom Truck One

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Custom Truck One are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Custom Truck unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Omaha and Custom Truck

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

The idea behind Boston Omaha Corp and Custom Truck One 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.