Correlation Between Canfor and CGI
Can any of the company-specific risk be diversified away by investing in both Canfor and CGI 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 CGI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canfor and CGI Inc, you can compare the effects of market volatilities on Canfor and CGI 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 CGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canfor and CGI.
Diversification Opportunities for Canfor and CGI
Very good diversification
The 3 months correlation between Canfor and CGI is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Canfor and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI 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 CGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGI Inc has no effect on the direction of Canfor i.e., Canfor and CGI go up and down completely randomly.
Pair Corralation between Canfor and CGI
Assuming the 90 days trading horizon Canfor is expected to under-perform the CGI. But the stock apears to be less risky and, when comparing its historical volatility, Canfor is 1.33 times less risky than CGI. The stock trades about -0.07 of its potential returns per unit of risk. The CGI Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 16,265 in CGI Inc on November 28, 2024 and sell it today you would lose (51.00) from holding CGI Inc or give up 0.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canfor vs. CGI Inc
Performance |
| Timeline |
| Canfor |
| CGI Inc |
Canfor and CGI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canfor and CGI
The main advantage of trading using opposite Canfor and CGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canfor position performs unexpectedly, CGI 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 CGI will offset losses from the drop in CGI's long position.| Canfor vs. GoldQuest Mining Corp | Canfor vs. Maple Peak Investments | Canfor vs. Black Mammoth Metals | Canfor vs. Perseus Mining |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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