Correlation Between Canfor and Interfor
Can any of the company-specific risk be diversified away by investing in both Canfor and Interfor 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 Interfor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canfor and Interfor, you can compare the effects of market volatilities on Canfor and Interfor 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 Interfor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canfor and Interfor.
Diversification Opportunities for Canfor and Interfor
Almost no diversification
The 3 months correlation between Canfor and Interfor is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Canfor and Interfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interfor 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 Interfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interfor has no effect on the direction of Canfor i.e., Canfor and Interfor go up and down completely randomly.
Pair Corralation between Canfor and Interfor
Assuming the 90 days horizon Canfor is expected to generate 1.61 times less return on investment than Interfor. But when comparing it to its historical volatility, Canfor is 1.24 times less risky than Interfor. It trades about 0.09 of its potential returns per unit of risk. Interfor is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,235 in Interfor on August 28, 2024 and sell it today you would earn a total of 230.00 from holding Interfor or generate 18.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canfor vs. Interfor
Performance |
| Timeline |
| Canfor |
| Interfor |
Canfor and Interfor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canfor and Interfor
The main advantage of trading using opposite Canfor and Interfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canfor position performs unexpectedly, Interfor 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 Interfor will offset losses from the drop in Interfor's long position.| Canfor vs. Conifex Timber | Canfor vs. GreenFirst Forest Products | Canfor vs. West Fraser Timber | Canfor vs. Ufp Industries |
| Interfor vs. Ascendant Resources | Interfor vs. Cantex Mine Development | Interfor vs. Amarc Resources | Interfor vs. Sterling Metals Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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