Correlation Between CCL Industries and Westport Fuel
Can any of the company-specific risk be diversified away by investing in both CCL Industries and Westport Fuel 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 Westport Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and Westport Fuel Systems, you can compare the effects of market volatilities on CCL Industries and Westport Fuel 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 Westport Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Westport Fuel.
Diversification Opportunities for CCL Industries and Westport Fuel
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CCL and Westport is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Westport Fuel Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westport Fuel Systems 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 Westport Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westport Fuel Systems has no effect on the direction of CCL Industries i.e., CCL Industries and Westport Fuel go up and down completely randomly.
Pair Corralation between CCL Industries and Westport Fuel
Assuming the 90 days trading horizon CCL Industries is expected to generate 0.41 times more return on investment than Westport Fuel. However, CCL Industries is 2.47 times less risky than Westport Fuel. It trades about 0.04 of its potential returns per unit of risk. Westport Fuel Systems is currently generating about -0.01 per unit of risk. If you would invest 6,263 in CCL Industries on August 26, 2024 and sell it today you would earn a total of 1,505 from holding CCL Industries or generate 24.03% 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. Westport Fuel Systems
Performance |
| Timeline |
| CCL Industries |
| Westport Fuel Systems |
CCL Industries and Westport Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CCL Industries and Westport Fuel
The main advantage of trading using opposite CCL Industries and Westport Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries position performs unexpectedly, Westport Fuel 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 Westport Fuel will offset losses from the drop in Westport Fuel's long position.| CCL Industries vs. Stella Jones | CCL Industries vs. Gildan Activewear | CCL Industries vs. Toromont Industries | CCL Industries vs. Waste Connections |
| Westport Fuel vs. Martinrea International | Westport Fuel vs. Magna International | Westport Fuel vs. CCL Industries | Westport Fuel vs. Stella Jones |
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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