Correlation Between CCL Industries and International Petroleum
Can any of the company-specific risk be diversified away by investing in both CCL Industries and International Petroleum 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 International Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and International Petroleum Corp, you can compare the effects of market volatilities on CCL Industries and International Petroleum 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 International Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and International Petroleum.
Diversification Opportunities for CCL Industries and International Petroleum
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CCL and International is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and International Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Petroleum 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 International Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Petroleum has no effect on the direction of CCL Industries i.e., CCL Industries and International Petroleum go up and down completely randomly.
Pair Corralation between CCL Industries and International Petroleum
Assuming the 90 days trading horizon CCL Industries is expected to under-perform the International Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, CCL Industries is 1.46 times less risky than International Petroleum. The stock trades about -0.23 of its potential returns per unit of risk. The International Petroleum Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,587 in International Petroleum Corp on August 30, 2024 and sell it today you would lose (3.00) from holding International Petroleum Corp or give up 0.19% 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. International Petroleum Corp
Performance |
| Timeline |
| CCL Industries |
| International Petroleum |
CCL Industries and International Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CCL Industries and International Petroleum
The main advantage of trading using opposite CCL Industries and International Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries position performs unexpectedly, International Petroleum 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 International Petroleum will offset losses from the drop in International Petroleum's long position.| CCL Industries vs. CCL Industries | CCL Industries vs. Quebecor | CCL Industries vs. Winpak | CCL Industries vs. Restaurant Brands International |
| International Petroleum vs. Canadian Natural Resources | International Petroleum vs. Suncor Energy | International Petroleum vs. iShares Canadian HYBrid | International Petroleum vs. Altagas Cum Red |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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