Correlation Between WM Technology and Canfor Pulp
Can any of the company-specific risk be diversified away by investing in both WM Technology and Canfor Pulp 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 WM Technology and Canfor Pulp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WM Technology and Canfor Pulp Products, you can compare the effects of market volatilities on WM Technology and Canfor Pulp 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 WM Technology with a short position of Canfor Pulp. Check out your portfolio center. Please also check ongoing floating volatility patterns of WM Technology and Canfor Pulp.
Diversification Opportunities for WM Technology and Canfor Pulp
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MAPSW and Canfor is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding WM Technology and Canfor Pulp Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor Pulp Products and WM Technology 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 WM Technology are associated (or correlated) with Canfor Pulp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor Pulp Products has no effect on the direction of WM Technology i.e., WM Technology and Canfor Pulp go up and down completely randomly.
Pair Corralation between WM Technology and Canfor Pulp
Assuming the 90 days horizon WM Technology is expected to generate 6.0 times more return on investment than Canfor Pulp. However, WM Technology is 6.0 times more volatile than Canfor Pulp Products. It trades about 0.09 of its potential returns per unit of risk. Canfor Pulp Products is currently generating about -0.23 per unit of risk. If you would invest 2.90 in WM Technology on August 29, 2024 and sell it today you would earn a total of 0.21 from holding WM Technology or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
WM Technology vs. Canfor Pulp Products
Performance |
| Timeline |
| WM Technology |
| Canfor Pulp Products |
WM Technology and Canfor Pulp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WM Technology and Canfor Pulp
The main advantage of trading using opposite WM Technology and Canfor Pulp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WM Technology position performs unexpectedly, Canfor Pulp 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 Canfor Pulp will offset losses from the drop in Canfor Pulp's long position.| WM Technology vs. C3 Ai Inc | WM Technology vs. Workday | WM Technology vs. Intuit Inc | WM Technology vs. Zoom Video Communications |
| Canfor Pulp vs. Nine Dragons Paper | Canfor Pulp vs. Nine Dragons Paper | Canfor Pulp vs. Mondi PLC ADR | Canfor Pulp vs. Klabin Sa A |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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