Correlation Between Canfor and GreenFirst Forest
Can any of the company-specific risk be diversified away by investing in both Canfor and GreenFirst Forest 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 GreenFirst Forest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canfor and GreenFirst Forest Products, you can compare the effects of market volatilities on Canfor and GreenFirst Forest 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 GreenFirst Forest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canfor and GreenFirst Forest.
Diversification Opportunities for Canfor and GreenFirst Forest
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Canfor and GreenFirst is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Canfor and GreenFirst Forest Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenFirst Forest 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 GreenFirst Forest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenFirst Forest has no effect on the direction of Canfor i.e., Canfor and GreenFirst Forest go up and down completely randomly.
Pair Corralation between Canfor and GreenFirst Forest
Assuming the 90 days horizon Canfor is expected to generate 5.48 times less return on investment than GreenFirst Forest. But when comparing it to its historical volatility, Canfor is 2.67 times less risky than GreenFirst Forest. It trades about 0.09 of its potential returns per unit of risk. GreenFirst Forest Products is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 230.00 in GreenFirst Forest Products on August 28, 2024 and sell it today you would earn a total of 172.00 from holding GreenFirst Forest Products or generate 74.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canfor vs. GreenFirst Forest Products
Performance |
| Timeline |
| Canfor |
| GreenFirst Forest |
Canfor and GreenFirst Forest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canfor and GreenFirst Forest
The main advantage of trading using opposite Canfor and GreenFirst Forest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canfor position performs unexpectedly, GreenFirst Forest 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 GreenFirst Forest will offset losses from the drop in GreenFirst Forest's long position.| Canfor vs. Conifex Timber | Canfor vs. GreenFirst Forest Products | Canfor vs. West Fraser Timber | Canfor vs. Ufp Industries |
| GreenFirst Forest vs. Invesco High Income | GreenFirst Forest vs. Blackrock Muniholdings Ny | GreenFirst Forest vs. MFS Investment Grade | GreenFirst Forest vs. Federated Premier Municipal |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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