Correlation Between North West and CCL Industries
Can any of the company-specific risk be diversified away by investing in both North West 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 North West and CCL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North West and CCL Industries, you can compare the effects of market volatilities on North West 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 North West with a short position of CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of North West and CCL Industries.
Diversification Opportunities for North West and CCL Industries
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between North and CCL is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding North West and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries and North West 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 North West 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 North West i.e., North West and CCL Industries go up and down completely randomly.
Pair Corralation between North West and CCL Industries
Assuming the 90 days trading horizon North West is expected to under-perform the CCL Industries. In addition to that, North West is 2.09 times more volatile than CCL Industries. It trades about -0.24 of its total potential returns per unit of risk. CCL Industries is currently generating about -0.23 per unit of volatility. If you would invest 7,700 in CCL Industries on September 19, 2024 and sell it today you would lose (271.00) from holding CCL Industries or give up 3.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North West vs. CCL Industries
Performance |
| Timeline |
| North West |
| CCL Industries |
North West and CCL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North West and CCL Industries
The main advantage of trading using opposite North West and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North West 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.| North West vs. Covalon Technologies | North West vs. Sirona Biochem Corp | North West vs. Medicure | North West vs. Arch Biopartners |
| CCL Industries vs. Cogeco Communications | CCL Industries vs. Quebecor | CCL Industries vs. Finning International | CCL Industries vs. North West |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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