Correlation Between Red Pine and CCL Industries
Can any of the company-specific risk be diversified away by investing in both Red Pine 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 Red Pine and CCL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Pine Exploration and CCL Industries, you can compare the effects of market volatilities on Red Pine 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 Red Pine with a short position of CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and CCL Industries.
Diversification Opportunities for Red Pine and CCL Industries
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Red and CCL is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries and Red Pine 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 Red Pine Exploration 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 Red Pine i.e., Red Pine and CCL Industries go up and down completely randomly.
Pair Corralation between Red Pine and CCL Industries
Assuming the 90 days horizon Red Pine Exploration is expected to generate 2.29 times more return on investment than CCL Industries. However, Red Pine is 2.29 times more volatile than CCL Industries. It trades about -0.11 of its potential returns per unit of risk. CCL Industries is currently generating about -0.32 per unit of risk. If you would invest 13.00 in Red Pine Exploration on September 13, 2024 and sell it today you would lose (1.00) from holding Red Pine Exploration or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Pine Exploration vs. CCL Industries
Performance |
| Timeline |
| Red Pine Exploration |
| CCL Industries |
Red Pine and CCL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Pine and CCL Industries
The main advantage of trading using opposite Red Pine and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Pine 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.| Red Pine vs. Honey Badger Silver | Red Pine vs. Inventus Mining Corp | Red Pine vs. CANEX Metals | Red Pine vs. Ressources Minieres Radisson |
| CCL Industries vs. Stella Jones | CCL Industries vs. Gildan Activewear | CCL Industries vs. Toromont Industries | CCL Industries vs. Waste Connections |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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