Correlation Between Westbond Enterprises and Canfor
Can any of the company-specific risk be diversified away by investing in both Westbond Enterprises 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 Westbond Enterprises and Canfor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westbond Enterprises Corp and Canfor, you can compare the effects of market volatilities on Westbond Enterprises 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 Westbond Enterprises with a short position of Canfor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westbond Enterprises and Canfor.
Diversification Opportunities for Westbond Enterprises and Canfor
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westbond and Canfor is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Westbond Enterprises Corp and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor and Westbond Enterprises 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 Westbond Enterprises 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 Westbond Enterprises i.e., Westbond Enterprises and Canfor go up and down completely randomly.
Pair Corralation between Westbond Enterprises and Canfor
Assuming the 90 days horizon Westbond Enterprises Corp is expected to under-perform the Canfor. In addition to that, Westbond Enterprises is 2.32 times more volatile than Canfor. It trades about -0.28 of its total potential returns per unit of risk. Canfor is currently generating about -0.03 per unit of volatility. If you would invest 1,496 in Canfor on December 6, 2024 and sell it today you would lose (21.00) from holding Canfor or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westbond Enterprises Corp vs. Canfor
Performance |
| Timeline |
| Westbond Enterprises Corp |
| Canfor |
Westbond Enterprises and Canfor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westbond Enterprises and Canfor
The main advantage of trading using opposite Westbond Enterprises and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westbond Enterprises 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.| Westbond Enterprises vs. Newport Exploration | Westbond Enterprises vs. Parkit Enterprise | Westbond Enterprises vs. Urbanfund Corp | Westbond Enterprises vs. Gatekeeper Systems |
| Canfor vs. Western Investment | Canfor vs. Maple Peak Investments | Canfor vs. Diversified Royalty Corp | Canfor vs. Rogers Communications |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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