Correlation Between CCL Industries and Royal Canadian
Can any of the company-specific risk be diversified away by investing in both CCL Industries and Royal Canadian 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 Royal Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and Royal Canadian Mint, you can compare the effects of market volatilities on CCL Industries and Royal Canadian 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 Royal Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Royal Canadian.
Diversification Opportunities for CCL Industries and Royal Canadian
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CCL and Royal is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Royal Canadian Mint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Canadian Mint 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 Royal Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Canadian Mint has no effect on the direction of CCL Industries i.e., CCL Industries and Royal Canadian go up and down completely randomly.
Pair Corralation between CCL Industries and Royal Canadian
Assuming the 90 days trading horizon CCL Industries is expected to generate 0.9 times more return on investment than Royal Canadian. However, CCL Industries is 1.11 times less risky than Royal Canadian. It trades about -0.25 of its potential returns per unit of risk. Royal Canadian Mint is currently generating about -0.37 per unit of risk. If you would invest 8,363 in CCL Industries on August 31, 2024 and sell it today you would lose (635.00) from holding CCL Industries or give up 7.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CCL Industries vs. Royal Canadian Mint
Performance |
| Timeline |
| CCL Industries |
| Royal Canadian Mint |
CCL Industries and Royal Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CCL Industries and Royal Canadian
The main advantage of trading using opposite CCL Industries and Royal Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries position performs unexpectedly, Royal Canadian 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 Royal Canadian will offset losses from the drop in Royal Canadian's long position.| CCL Industries vs. Stella Jones | CCL Industries vs. Gildan Activewear | CCL Industries vs. Toromont Industries | CCL Industries vs. Waste Connections |
| Royal Canadian vs. Berkshire Hathaway CDR | Royal Canadian vs. JPMorgan Chase Co | Royal Canadian vs. Bank of America | Royal Canadian vs. Alphabet Inc CDR |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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