Filling gap at bottom of studbay

I have a large gap at the bottom of by stud bay where it bumps up against the siding. My house does not have sheathing, so what you are seeing is the siding. It is hard to tell, but the gap in the photo below is between 1/4 inch and about an inch.

My question is, what is the best way to fill this gap? I am thinking of either using a strip of wood or backer rod and putting a thick caulk or canned foam, but I am curious if there is a better or more proper way.