Correlation Between Spectrum Brands and Boston Omaha

Can any of the company-specific risk be diversified away by investing in both Spectrum Brands and Boston Omaha 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 Spectrum Brands and Boston Omaha into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Spectrum Brands Holdings and Boston Omaha Corp, you can compare the effects of market volatilities on Spectrum Brands and Boston Omaha 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 Spectrum Brands with a short position of Boston Omaha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Brands and Boston Omaha.

Diversification Opportunities for Spectrum Brands and Boston Omaha

0.33

Correlation Coefficient

Spectrum Brands  Boston Omaha

Weak diversification

The 3 months correlation between Spectrum and Boston is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands Holdings and Boston Omaha Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Omaha Corp and Spectrum Brands 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 Spectrum Brands Holdings are associated (or correlated) with Boston Omaha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Omaha Corp has no effect on the direction of Spectrum Brands i.e., Spectrum Brands and Boston Omaha go up and down completely randomly.

Pair Corralation between Spectrum Brands and Boston Omaha

Considering the 90-day investment horizon Spectrum Brands Holdings is expected to under-perform the Boston Omaha. In addition to that, Spectrum Brands is 1.05 times more volatile than Boston Omaha Corp. It trades about -0.18 of its total potential returns per unit of risk. Boston Omaha Corp is currently generating about -0.02 per unit of volatility. If you would invest  1,440  in Boston Omaha Corp on December 19, 2024 and sell it today you would lose (34.00) from holding Boston Omaha Corp or give up 2.36% of portfolio value over 90 days.

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

Spectrum Brands Holdings  vs.  Boston Omaha Corp

Spectrum Brands Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spectrum Brands Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Boston Omaha Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boston Omaha Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Boston Omaha is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Spectrum Brands and Boston Omaha

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

The idea behind Spectrum Brands Holdings and Boston Omaha Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.