Correlation Between National Storm and Canfor
Can any of the company-specific risk be diversified away by investing in both National Storm and Canfor 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 National Storm and Canfor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Storm Recovery and Canfor, you can compare the effects of market volatilities on National Storm and Canfor 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 National Storm with a short position of Canfor. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storm and Canfor.
Diversification Opportunities for National Storm and Canfor
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Canfor is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding National Storm Recovery and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor and National Storm 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 National Storm Recovery are associated (or correlated) with Canfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor has no effect on the direction of National Storm i.e., National Storm and Canfor go up and down completely randomly.
Pair Corralation between National Storm and Canfor
Given the investment horizon of 90 days National Storm Recovery is expected to under-perform the Canfor. In addition to that, National Storm is 4.37 times more volatile than Canfor. It trades about -0.33 of its total potential returns per unit of risk. Canfor is currently generating about 0.13 per unit of volatility. If you would invest 1,234 in Canfor on August 29, 2024 and sell it today you would earn a total of 67.00 from holding Canfor or generate 5.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
National Storm Recovery vs. Canfor
Performance |
| Timeline |
| National Storm Recovery |
| Canfor |
National Storm and Canfor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storm and Canfor
The main advantage of trading using opposite National Storm and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storm position performs unexpectedly, Canfor 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 will offset losses from the drop in Canfor's long position.The idea behind National Storm Recovery and Canfor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Canfor vs. Silver Hammer Mining | Canfor vs. Reyna Silver Corp | Canfor vs. Guanajuato Silver | Canfor vs. Silver One Resources |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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