Correlation Between Boralex and Canfor
Can any of the company-specific risk be diversified away by investing in both Boralex and Canfor 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 Canfor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boralex and Canfor, you can compare the effects of market volatilities on Boralex and Canfor 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 Canfor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boralex and Canfor.
Diversification Opportunities for Boralex and Canfor
Average diversification
The 3 months correlation between Boralex and Canfor is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Boralex and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor 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 Canfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor has no effect on the direction of Boralex i.e., Boralex and Canfor go up and down completely randomly.
Pair Corralation between Boralex and Canfor
Assuming the 90 days trading horizon Boralex is expected to under-perform the Canfor. But the stock apears to be less risky and, when comparing its historical volatility, Boralex is 1.12 times less risky than Canfor. The stock trades about -0.25 of its potential returns per unit of risk. The Canfor is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,674 in Canfor on August 31, 2024 and sell it today you would earn a total of 119.00 from holding Canfor or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boralex vs. Canfor
Performance |
| Timeline |
| Boralex |
| Canfor |
Boralex and Canfor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boralex and Canfor
The main advantage of trading using opposite Boralex and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boralex position performs unexpectedly, Canfor 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 Canfor will offset losses from the drop in Canfor's long position.| Boralex vs. Innergex Renewable Energy | Boralex vs. Northland Power | Boralex vs. Capital Power | Boralex vs. Brookfield Renewable Partners |
| Canfor vs. HPQ Silicon Resources | Canfor vs. High Liner Foods | Canfor vs. SPoT Coffee | Canfor vs. Maple Leaf Foods |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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