Correlation Between CCL Industries and Rubicon Organics
Can any of the company-specific risk be diversified away by investing in both CCL Industries and Rubicon Organics 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 Rubicon Organics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and Rubicon Organics, you can compare the effects of market volatilities on CCL Industries and Rubicon Organics 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 Rubicon Organics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Rubicon Organics.
Diversification Opportunities for CCL Industries and Rubicon Organics
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CCL and Rubicon is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics 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 Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of CCL Industries i.e., CCL Industries and Rubicon Organics go up and down completely randomly.
Pair Corralation between CCL Industries and Rubicon Organics
Assuming the 90 days trading horizon CCL Industries is expected to generate 0.25 times more return on investment than Rubicon Organics. However, CCL Industries is 4.07 times less risky than Rubicon Organics. It trades about 0.09 of its potential returns per unit of risk. Rubicon Organics is currently generating about 0.0 per unit of risk. If you would invest 5,665 in CCL Industries on August 27, 2024 and sell it today you would earn a total of 2,103 from holding CCL Industries or generate 37.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CCL Industries vs. Rubicon Organics
Performance |
| Timeline |
| CCL Industries |
| Rubicon Organics |
CCL Industries and Rubicon Organics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CCL Industries and Rubicon Organics
The main advantage of trading using opposite CCL Industries and Rubicon Organics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries position performs unexpectedly, Rubicon Organics 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 Rubicon Organics will offset losses from the drop in Rubicon Organics' long position.| CCL Industries vs. Stella Jones | CCL Industries vs. Gildan Activewear | CCL Industries vs. Toromont Industries | CCL Industries vs. Waste Connections |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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