Correlation Between CCL Industries and WesCan Energy
Can any of the company-specific risk be diversified away by investing in both CCL Industries and WesCan Energy 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 WesCan Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and WesCan Energy Corp, you can compare the effects of market volatilities on CCL Industries and WesCan Energy 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 WesCan Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and WesCan Energy.
Diversification Opportunities for CCL Industries and WesCan Energy
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CCL and WesCan is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and WesCan Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesCan Energy Corp 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 WesCan Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesCan Energy Corp has no effect on the direction of CCL Industries i.e., CCL Industries and WesCan Energy go up and down completely randomly.
Pair Corralation between CCL Industries and WesCan Energy
Assuming the 90 days trading horizon CCL Industries is expected to generate 4.13 times less return on investment than WesCan Energy. But when comparing it to its historical volatility, CCL Industries is 7.14 times less risky than WesCan Energy. It trades about 0.09 of its potential returns per unit of risk. WesCan Energy Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8.00 in WesCan Energy Corp on September 1, 2024 and sell it today you would earn a total of 1.00 from holding WesCan Energy Corp or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CCL Industries vs. WesCan Energy Corp
Performance |
| Timeline |
| CCL Industries |
| WesCan Energy Corp |
CCL Industries and WesCan Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CCL Industries and WesCan Energy
The main advantage of trading using opposite CCL Industries and WesCan Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries position performs unexpectedly, WesCan Energy 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 WesCan Energy will offset losses from the drop in WesCan Energy's long position.| CCL Industries vs. CCL Industries | CCL Industries vs. Quebecor | CCL Industries vs. Winpak | CCL Industries vs. Restaurant Brands International |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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