Correlation Between Boralex and CCL Industries
Can any of the company-specific risk be diversified away by investing in both Boralex and CCL Industries 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 Boralex and CCL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boralex and CCL Industries, you can compare the effects of market volatilities on Boralex and CCL Industries 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 Boralex with a short position of CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boralex and CCL Industries.
Diversification Opportunities for Boralex and CCL Industries
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boralex and CCL is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Boralex and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries and Boralex 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 Boralex are associated (or correlated) with CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Boralex i.e., Boralex and CCL Industries go up and down completely randomly.
Pair Corralation between Boralex and CCL Industries
Assuming the 90 days trading horizon Boralex is expected to under-perform the CCL Industries. In addition to that, Boralex is 1.39 times more volatile than CCL Industries. It trades about -0.25 of its total potential returns per unit of risk. CCL Industries is currently generating about -0.12 per unit of volatility. If you would invest 8,129 in CCL Industries on September 5, 2024 and sell it today you would lose (289.00) from holding CCL Industries or give up 3.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boralex vs. CCL Industries
Performance |
| Timeline |
| Boralex |
| CCL Industries |
Boralex and CCL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boralex and CCL Industries
The main advantage of trading using opposite Boralex and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boralex position performs unexpectedly, CCL Industries 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 CCL Industries will offset losses from the drop in CCL Industries' long position.The idea behind Boralex and CCL Industries 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.| CCL Industries vs. Canfor | CCL Industries vs. Boralex | CCL Industries vs. Stella Jones | CCL Industries vs. Saputo Inc |
Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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