Correlation Between Canfor and CAE
Can any of the company-specific risk be diversified away by investing in both Canfor and CAE 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 Canfor and CAE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canfor and CAE Inc, you can compare the effects of market volatilities on Canfor and CAE 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 Canfor with a short position of CAE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canfor and CAE.
Diversification Opportunities for Canfor and CAE
Very weak diversification
The 3 months correlation between Canfor and CAE is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Canfor and CAE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAE Inc and Canfor 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 Canfor are associated (or correlated) with CAE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAE Inc has no effect on the direction of Canfor i.e., Canfor and CAE go up and down completely randomly.
Pair Corralation between Canfor and CAE
Assuming the 90 days trading horizon Canfor is expected to under-perform the CAE. In addition to that, Canfor is 1.29 times more volatile than CAE Inc. It trades about -0.01 of its total potential returns per unit of risk. CAE Inc is currently generating about 0.04 per unit of volatility. If you would invest 2,769 in CAE Inc on September 2, 2024 and sell it today you would earn a total of 522.00 from holding CAE Inc or generate 18.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canfor vs. CAE Inc
Performance |
| Timeline |
| Canfor |
| CAE Inc |
Canfor and CAE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canfor and CAE
The main advantage of trading using opposite Canfor and CAE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canfor position performs unexpectedly, CAE 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 CAE will offset losses from the drop in CAE's long position.| Canfor vs. Ramp Metals | Canfor vs. Arbor Metals Corp | Canfor vs. Information Services | Canfor vs. Northstar Clean Technologies |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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