Correlation Between Eagle Materials and Boise Cascad

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

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

Diversification Opportunities for Eagle Materials and Boise Cascad

0.9

Correlation Coefficient

Eagle Materials  Boise Cascad

Almost no diversification

The 3 months correlation between Eagle and Boise is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials 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 Eagle Materials 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 Eagle Materials 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 Eagle Materials i.e., Eagle Materials and Boise Cascad go up and down completely randomly.

Pair Corralation between Eagle Materials and Boise Cascad

Considering the 90-day investment horizon Eagle Materials is expected to generate 1.26 times less return on investment than Boise Cascad. But when comparing it to its historical volatility, Eagle Materials is 1.21 times less risky than Boise Cascad. It trades about 0.07 of its potential returns per unit of risk. Boise Cascad Llc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,905  in Boise Cascad Llc on October 10, 2024 and sell it today you would earn a total of  5,917  from holding Boise Cascad Llc or generate 100.2% return on investment over 90 days.

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

Eagle Materials  vs.  Boise Cascad Llc

Eagle Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 Eagle Materials and Boise Cascad

The main advantage of trading using opposite Eagle Materials and Boise Cascad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials 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 Eagle Materials 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.