Correlation Between GreenFirst Forest and Conifex Timber
Can any of the company-specific risk be diversified away by investing in both GreenFirst Forest and Conifex Timber 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 GreenFirst Forest and Conifex Timber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenFirst Forest Products and Conifex Timber, you can compare the effects of market volatilities on GreenFirst Forest and Conifex Timber 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 GreenFirst Forest with a short position of Conifex Timber. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenFirst Forest and Conifex Timber.
Diversification Opportunities for GreenFirst Forest and Conifex Timber
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GreenFirst and Conifex is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding GreenFirst Forest Products and Conifex Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conifex Timber and GreenFirst Forest 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 GreenFirst Forest Products are associated (or correlated) with Conifex Timber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conifex Timber has no effect on the direction of GreenFirst Forest i.e., GreenFirst Forest and Conifex Timber go up and down completely randomly.
Pair Corralation between GreenFirst Forest and Conifex Timber
Assuming the 90 days horizon GreenFirst Forest Products is expected to under-perform the Conifex Timber. But the pink sheet apears to be less risky and, when comparing its historical volatility, GreenFirst Forest Products is 2.23 times less risky than Conifex Timber. The pink sheet trades about -0.46 of its potential returns per unit of risk. The Conifex Timber is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 50.00 in Conifex Timber on September 1, 2024 and sell it today you would lose (8.00) from holding Conifex Timber or give up 16.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GreenFirst Forest Products vs. Conifex Timber
Performance |
| Timeline |
| GreenFirst Forest |
| Conifex Timber |
GreenFirst Forest and Conifex Timber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GreenFirst Forest and Conifex Timber
The main advantage of trading using opposite GreenFirst Forest and Conifex Timber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenFirst Forest position performs unexpectedly, Conifex Timber 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 Conifex Timber will offset losses from the drop in Conifex Timber's long position.| GreenFirst Forest vs. HUMANA INC | GreenFirst Forest vs. SCOR PK | GreenFirst Forest vs. Aquagold International | GreenFirst Forest vs. Thrivent High Yield |
| Conifex Timber vs. Western Forest Products | Conifex Timber vs. Interfor Corp | Conifex Timber vs. Canfor Pulp Products | Conifex Timber vs. Canfor |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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