Correlation Between Simpson Manufacturing and Conifex Timber
Can any of the company-specific risk be diversified away by investing in both Simpson Manufacturing and Conifex Timber 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 Simpson Manufacturing and Conifex Timber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simpson Manufacturing and Conifex Timber, you can compare the effects of market volatilities on Simpson Manufacturing and Conifex Timber 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 Simpson Manufacturing with a short position of Conifex Timber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simpson Manufacturing and Conifex Timber.
Diversification Opportunities for Simpson Manufacturing and Conifex Timber
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Simpson and Conifex is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Simpson Manufacturing and Conifex Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conifex Timber and Simpson Manufacturing 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 Simpson Manufacturing are associated (or correlated) with Conifex Timber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conifex Timber has no effect on the direction of Simpson Manufacturing i.e., Simpson Manufacturing and Conifex Timber go up and down completely randomly.
Pair Corralation between Simpson Manufacturing and Conifex Timber
Considering the 90-day investment horizon Simpson Manufacturing is expected to generate 2.67 times less return on investment than Conifex Timber. But when comparing it to its historical volatility, Simpson Manufacturing is 8.85 times less risky than Conifex Timber. It trades about 0.08 of its potential returns per unit of risk. Conifex Timber is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 119.00 in Conifex Timber on August 24, 2024 and sell it today you would lose (86.00) from holding Conifex Timber or give up 72.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Simpson Manufacturing vs. Conifex Timber
Performance |
| Timeline |
| Simpson Manufacturing |
| Conifex Timber |
Simpson Manufacturing and Conifex Timber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simpson Manufacturing and Conifex Timber
The main advantage of trading using opposite Simpson Manufacturing and Conifex Timber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simpson Manufacturing position performs unexpectedly, Conifex Timber 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 Conifex Timber will offset losses from the drop in Conifex Timber's long position.| Simpson Manufacturing vs. West Fraser Timber | Simpson Manufacturing vs. Interfor | Simpson Manufacturing vs. Ufp Industries | Simpson Manufacturing vs. Canfor |
| Conifex Timber vs. Ascendant Resources | Conifex Timber vs. Cantex Mine Development | Conifex Timber vs. Amarc Resources | Conifex Timber vs. Sterling Metals Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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