Correlation Between 191216CU2 and Boston Omaha

Can any of the company-specific risk be diversified away by investing in both 191216CU2 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 191216CU2 and Boston Omaha into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COCA COLA CO and Boston Omaha Corp, you can compare the effects of market volatilities on 191216CU2 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 191216CU2 with a short position of Boston Omaha. Check out your portfolio center. Please also check ongoing floating volatility patterns of 191216CU2 and Boston Omaha.

Diversification Opportunities for 191216CU2 and Boston Omaha

-0.05

Correlation Coefficient

191216CU2  Boston Omaha

Good diversification

The 3 months correlation between 191216CU2 and Boston is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding COCA COLA CO 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 191216CU2 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 COCA COLA CO 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 191216CU2 i.e., 191216CU2 and Boston Omaha go up and down completely randomly.

Pair Corralation between 191216CU2 and Boston Omaha

Assuming the 90 days trading horizon COCA COLA CO is expected to under-perform the Boston Omaha. But the bond apears to be less risky and, when comparing its historical volatility, COCA COLA CO is 2.1 times less risky than Boston Omaha. The bond trades about -0.19 of its potential returns per unit of risk. The Boston Omaha Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,445  in Boston Omaha Corp on October 27, 2024 and sell it today you would earn a total of  13.00  from holding Boston Omaha Corp or generate 0.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

COCA COLA CO  vs.  Boston Omaha Corp

COCA A CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216CU2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Boston Omaha Corp

Risk-Adjusted Performance

0 of 100

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 191216CU2 and Boston Omaha

The main advantage of trading using opposite 191216CU2 and Boston Omaha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 191216CU2 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 COCA COLA CO 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.