Correlation Between Conifex Timber and Itafos Corp
Can any of the company-specific risk be diversified away by investing in both Conifex Timber and Itafos Corp 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 Conifex Timber and Itafos Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Conifex Timber and Itafos Corp, you can compare the effects of market volatilities on Conifex Timber and Itafos Corp 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 Conifex Timber with a short position of Itafos Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Conifex Timber and Itafos Corp.
Diversification Opportunities for Conifex Timber and Itafos Corp
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Conifex and Itafos is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Conifex Timber and Itafos Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itafos Corp and Conifex Timber 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 Conifex Timber are associated (or correlated) with Itafos Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itafos Corp has no effect on the direction of Conifex Timber i.e., Conifex Timber and Itafos Corp go up and down completely randomly.
Pair Corralation between Conifex Timber and Itafos Corp
Assuming the 90 days trading horizon Conifex Timber is expected to under-perform the Itafos Corp. In addition to that, Conifex Timber is 2.15 times more volatile than Itafos Corp. It trades about -0.12 of its total potential returns per unit of risk. Itafos Corp is currently generating about 0.11 per unit of volatility. If you would invest 163.00 in Itafos Corp on September 1, 2024 and sell it today you would earn a total of 9.00 from holding Itafos Corp or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Conifex Timber vs. Itafos Corp
Performance |
| Timeline |
| Conifex Timber |
| Itafos Corp |
Conifex Timber and Itafos Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Conifex Timber and Itafos Corp
The main advantage of trading using opposite Conifex Timber and Itafos Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Conifex Timber position performs unexpectedly, Itafos Corp 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 Itafos Corp will offset losses from the drop in Itafos Corp's long position.| Conifex Timber vs. Western Forest Products | Conifex Timber vs. Interfor Corp | Conifex Timber vs. Canfor Pulp Products | Conifex Timber vs. Canfor |
| Itafos Corp vs. McChip Resources | Itafos Corp vs. International Zeolite Corp | Itafos Corp vs. Highway 50 Gold |
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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