Correlation Between CCL Industries and Headwater Exploration
Can any of the company-specific risk be diversified away by investing in both CCL Industries and Headwater Exploration 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 CCL Industries and Headwater Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and Headwater Exploration, you can compare the effects of market volatilities on CCL Industries and Headwater Exploration 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 CCL Industries with a short position of Headwater Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Headwater Exploration.
Diversification Opportunities for CCL Industries and Headwater Exploration
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CCL and Headwater is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Headwater Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Headwater Exploration and CCL Industries 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 CCL Industries are associated (or correlated) with Headwater Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Headwater Exploration has no effect on the direction of CCL Industries i.e., CCL Industries and Headwater Exploration go up and down completely randomly.
Pair Corralation between CCL Industries and Headwater Exploration
Assuming the 90 days trading horizon CCL Industries is expected to generate 0.47 times more return on investment than Headwater Exploration. However, CCL Industries is 2.11 times less risky than Headwater Exploration. It trades about -0.23 of its potential returns per unit of risk. Headwater Exploration is currently generating about -0.26 per unit of risk. If you would invest 7,700 in CCL Industries on September 18, 2024 and sell it today you would lose (271.00) from holding CCL Industries or give up 3.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CCL Industries vs. Headwater Exploration
Performance |
| Timeline |
| CCL Industries |
| Headwater Exploration |
CCL Industries and Headwater Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CCL Industries and Headwater Exploration
The main advantage of trading using opposite CCL Industries and Headwater Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries position performs unexpectedly, Headwater Exploration 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 Headwater Exploration will offset losses from the drop in Headwater Exploration's long position.| CCL Industries vs. Cogeco Communications | CCL Industries vs. Quebecor | CCL Industries vs. Finning International | CCL Industries vs. North West |
| Headwater Exploration vs. Journey Energy | Headwater Exploration vs. Yangarra Resources | Headwater Exploration vs. Pine Cliff Energy |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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