Correlation Between James Hardie and Boise Cascad

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

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

Diversification Opportunities for James Hardie and Boise Cascad

0.64

Correlation Coefficient

James Hardie  Boise Cascad

Poor diversification

The 3 months correlation between James and Boise is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding James Hardie Industries 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 James Hardie 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 James Hardie Industries 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 James Hardie i.e., James Hardie and Boise Cascad go up and down completely randomly.

Pair Corralation between James Hardie and Boise Cascad

Considering the 90-day investment horizon James Hardie Industries is expected to generate 1.05 times more return on investment than Boise Cascad. However, James Hardie is 1.05 times more volatile than Boise Cascad Llc. It trades about -0.06 of its potential returns per unit of risk. Boise Cascad Llc is currently generating about -0.17 per unit of risk. If you would invest  3,187  in James Hardie Industries on December 24, 2024 and sell it today you would lose (259.00) from holding James Hardie Industries or give up 8.13% of portfolio value over 90 days.

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

James Hardie Industries  vs.  Boise Cascad Llc

James Hardie Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days James Hardie Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with James Hardie and Boise Cascad

The main advantage of trading using opposite James Hardie and Boise Cascad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James Hardie 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 James Hardie Industries 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.