Correlation Between CRH PLC and Boise Cascad

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

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

Diversification Opportunities for CRH PLC and Boise Cascad

0.49

Correlation Coefficient

CRH PLC  Boise Cascad

Very weak diversification

The 3 months correlation between CRH and Boise is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CRH PLC ADR and Boise Cascad Llc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boise Cascad Llc and CRH PLC 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 CRH PLC ADR are associated (or correlated) with Boise Cascad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boise Cascad Llc has no effect on the direction of CRH PLC i.e., CRH PLC and Boise Cascad go up and down completely randomly.

Pair Corralation between CRH PLC and Boise Cascad

Considering the 90-day investment horizon CRH PLC ADR is expected to generate 0.67 times more return on investment than Boise Cascad. However, CRH PLC ADR is 1.49 times less risky than Boise Cascad. It trades about -0.39 of its potential returns per unit of risk. Boise Cascad Llc is currently generating about -0.64 per unit of risk. If you would invest  10,009  in CRH PLC ADR on October 10, 2024 and sell it today you would lose (777.00) from holding CRH PLC ADR or give up 7.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

CRH PLC ADR  vs.  Boise Cascad Llc

CRH PLC ADR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CRH PLC ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, CRH PLC is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Boise Cascad Llc

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CRH PLC and Boise Cascad

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

The idea behind CRH PLC ADR and Boise Cascad Llc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.