Correlation Between FREEPORT and Boston Omaha

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

By analyzing existing cross correlation between FREEPORT MCMORAN INC 525 and Boston Omaha Corp, you can compare the effects of market volatilities on FREEPORT 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 FREEPORT with a short position of Boston Omaha. Check out your portfolio center. Please also check ongoing floating volatility patterns of FREEPORT and Boston Omaha.

Diversification Opportunities for FREEPORT and Boston Omaha

-0.09

Correlation Coefficient

FREEPORT  Boston Omaha

Good diversification

The 3 months correlation between FREEPORT and Boston is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding FREEPORT MCMORAN INC 525 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 FREEPORT 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 FREEPORT MCMORAN INC 525 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 FREEPORT i.e., FREEPORT and Boston Omaha go up and down completely randomly.

Pair Corralation between FREEPORT and Boston Omaha

Assuming the 90 days trading horizon FREEPORT MCMORAN INC 525 is expected to generate 0.26 times more return on investment than Boston Omaha. However, FREEPORT MCMORAN INC 525 is 3.81 times less risky than Boston Omaha. It trades about -0.08 of its potential returns per unit of risk. Boston Omaha Corp is currently generating about -0.02 per unit of risk. If you would invest  10,103  in FREEPORT MCMORAN INC 525 on September 21, 2024 and sell it today you would lose (171.00) from holding FREEPORT MCMORAN INC 525 or give up 1.69% of portfolio value over 90 days.

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

FREEPORT MCMORAN INC 525  vs.  Boston Omaha Corp

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FREEPORT is not utilizing all of its potentials. The latest 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 FREEPORT and Boston Omaha

The main advantage of trading using opposite FREEPORT and Boston Omaha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FREEPORT 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 FREEPORT MCMORAN INC 525 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.