Correlation Between Loblaw Companies and CCL Industries
Can any of the company-specific risk be diversified away by investing in both Loblaw Companies and CCL Industries 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 Loblaw Companies and CCL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loblaw Companies Limited and CCL Industries, you can compare the effects of market volatilities on Loblaw Companies and CCL Industries 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 Loblaw Companies with a short position of CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loblaw Companies and CCL Industries.
Diversification Opportunities for Loblaw Companies and CCL Industries
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Loblaw and CCL is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Loblaw Companies Limited and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries and Loblaw Companies 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 Loblaw Companies Limited are associated (or correlated) with CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Loblaw Companies i.e., Loblaw Companies and CCL Industries go up and down completely randomly.
Pair Corralation between Loblaw Companies and CCL Industries
Given the investment horizon of 90 days Loblaw Companies Limited is expected to generate 0.65 times more return on investment than CCL Industries. However, Loblaw Companies Limited is 1.54 times less risky than CCL Industries. It trades about 0.18 of its potential returns per unit of risk. CCL Industries is currently generating about 0.06 per unit of risk. If you would invest 12,538 in Loblaw Companies Limited on September 20, 2024 and sell it today you would earn a total of 6,553 from holding Loblaw Companies Limited or generate 52.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loblaw Companies Limited vs. CCL Industries
Performance |
| Timeline |
| Loblaw Companies |
| CCL Industries |
Loblaw Companies and CCL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loblaw Companies and CCL Industries
The main advantage of trading using opposite Loblaw Companies and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loblaw Companies position performs unexpectedly, CCL Industries 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 CCL Industries will offset losses from the drop in CCL Industries' long position.| Loblaw Companies vs. Covalon Technologies | Loblaw Companies vs. Sirona Biochem Corp | Loblaw Companies vs. Medicure | Loblaw Companies vs. Arch Biopartners |
| CCL Industries vs. CCL Industries | CCL Industries vs. Quebecor | CCL Industries vs. Winpak | CCL Industries vs. Restaurant Brands International |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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