Correlation Between T2 Metals and Canfor
Can any of the company-specific risk be diversified away by investing in both T2 Metals 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 T2 Metals and Canfor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T2 Metals Corp and Canfor, you can compare the effects of market volatilities on T2 Metals 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 T2 Metals with a short position of Canfor. Check out your portfolio center. Please also check ongoing floating volatility patterns of T2 Metals and Canfor.
Diversification Opportunities for T2 Metals and Canfor
Poor diversification
The 3 months correlation between TWO and Canfor is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding T2 Metals Corp and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor and T2 Metals 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 T2 Metals Corp 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 T2 Metals i.e., T2 Metals and Canfor go up and down completely randomly.
Pair Corralation between T2 Metals and Canfor
Assuming the 90 days horizon T2 Metals Corp is expected to under-perform the Canfor. In addition to that, T2 Metals is 1.48 times more volatile than Canfor. It trades about -0.21 of its total potential returns per unit of risk. Canfor is currently generating about -0.19 per unit of volatility. If you would invest 1,588 in Canfor on November 6, 2024 and sell it today you would lose (92.00) from holding Canfor or give up 5.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
T2 Metals Corp vs. Canfor
Performance |
| Timeline |
| T2 Metals Corp |
| Canfor |
T2 Metals and Canfor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T2 Metals and Canfor
The main advantage of trading using opposite T2 Metals and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T2 Metals 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.| T2 Metals vs. SalesforceCom CDR | T2 Metals vs. Renoworks Software | T2 Metals vs. Wilmington Capital Management | T2 Metals vs. Datable Technology 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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