Correlation Between Boswell J and Intrepid Potash

Can any of the company-specific risk be diversified away by investing in both Boswell J and Intrepid Potash 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 Boswell J and Intrepid Potash into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boswell J G and Intrepid Potash, you can compare the effects of market volatilities on Boswell J and Intrepid Potash 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 Boswell J with a short position of Intrepid Potash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boswell J and Intrepid Potash.

Diversification Opportunities for Boswell J and Intrepid Potash

0.84

Correlation Coefficient

Boswell J  Intrepid Potash

Very poor diversification

The 3 months correlation between Boswell and Intrepid is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Boswell J G and Intrepid Potash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrepid Potash and Boswell J 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 Boswell J G are associated (or correlated) with Intrepid Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrepid Potash has no effect on the direction of Boswell J i.e., Boswell J and Intrepid Potash go up and down completely randomly.

Pair Corralation between Boswell J and Intrepid Potash

Given the investment horizon of 90 days Boswell J is expected to generate 2.91 times less return on investment than Intrepid Potash. But when comparing it to its historical volatility, Boswell J G is 1.64 times less risky than Intrepid Potash. It trades about 0.06 of its potential returns per unit of risk. Intrepid Potash is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,355  in Intrepid Potash on September 1, 2024 and sell it today you would earn a total of  356.00  from holding Intrepid Potash or generate 15.12% return on investment over 90 days.

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

Boswell J G  vs.  Intrepid Potash

Boswell J G

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Boswell J G are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Boswell J is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Intrepid Potash

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Potash are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Intrepid Potash demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boswell J and Intrepid Potash

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

The idea behind Boswell J G and Intrepid Potash 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.