Correlation Between Western Forest and Cantex Mine
Can any of the company-specific risk be diversified away by investing in both Western Forest and Cantex Mine 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 Western Forest and Cantex Mine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Forest Products and Cantex Mine Development, you can compare the effects of market volatilities on Western Forest and Cantex Mine 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 Western Forest with a short position of Cantex Mine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Forest and Cantex Mine.
Diversification Opportunities for Western Forest and Cantex Mine
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Cantex is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Western Forest Products and Cantex Mine Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantex Mine Development and Western Forest 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 Western Forest Products are associated (or correlated) with Cantex Mine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantex Mine Development has no effect on the direction of Western Forest i.e., Western Forest and Cantex Mine go up and down completely randomly.
Pair Corralation between Western Forest and Cantex Mine
Assuming the 90 days horizon Western Forest Products is expected to under-perform the Cantex Mine. But the pink sheet apears to be less risky and, when comparing its historical volatility, Western Forest Products is 2.16 times less risky than Cantex Mine. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Cantex Mine Development is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Cantex Mine Development on September 1, 2024 and sell it today you would lose (9.74) from holding Cantex Mine Development or give up 57.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.49% |
| Values | Daily Returns |
Western Forest Products vs. Cantex Mine Development
Performance |
| Timeline |
| Western Forest Products |
| Cantex Mine Development |
Western Forest and Cantex Mine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Forest and Cantex Mine
The main advantage of trading using opposite Western Forest and Cantex Mine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Forest position performs unexpectedly, Cantex Mine 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 Cantex Mine will offset losses from the drop in Cantex Mine's long position.| Western Forest vs. Interfor | Western Forest vs. Svenska Cellulosa Aktiebolaget | Western Forest vs. Stella Jones | Western Forest vs. Simpson Manufacturing |
| Cantex Mine vs. Champion Bear Resources | Cantex Mine vs. Aurelia Metals Limited | Cantex Mine vs. Baroyeca Gold Silver | Cantex Mine vs. Centaurus Metals Limited |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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