Correlation Between Knife River and Boise Cascad

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

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

Diversification Opportunities for Knife River and Boise Cascad

0.92

Correlation Coefficient

Knife River  Boise Cascad

Almost no diversification

The 3 months correlation between Knife and Boise is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Knife River 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 Knife River 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 Knife River 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 Knife River i.e., Knife River and Boise Cascad go up and down completely randomly.

Pair Corralation between Knife River and Boise Cascad

Considering the 90-day investment horizon Knife River is expected to generate 1.38 times more return on investment than Boise Cascad. However, Knife River is 1.38 times more volatile than Boise Cascad Llc. It trades about -0.07 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  10,356  in Knife River on December 24, 2024 and sell it today you would lose (1,245) from holding Knife River or give up 12.02% of portfolio value over 90 days.

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

Knife River  vs.  Boise Cascad Llc

Knife River

Risk-Adjusted Performance

Very Weak

Over the last 90 days Knife River has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 Knife River and Boise Cascad

The main advantage of trading using opposite Knife River and Boise Cascad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River 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 Knife River 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.