Correlation Between Winpak and North West
Can any of the company-specific risk be diversified away by investing in both Winpak and North West 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 Winpak and North West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Winpak and North West, you can compare the effects of market volatilities on Winpak and North West 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 Winpak with a short position of North West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winpak and North West.
Diversification Opportunities for Winpak and North West
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Winpak and North is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Winpak and North West in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North West and Winpak 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 Winpak are associated (or correlated) with North West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North West has no effect on the direction of Winpak i.e., Winpak and North West go up and down completely randomly.
Pair Corralation between Winpak and North West
Assuming the 90 days trading horizon Winpak is expected to generate 0.8 times more return on investment than North West. However, Winpak is 1.25 times less risky than North West. It trades about 0.12 of its potential returns per unit of risk. North West is currently generating about 0.07 per unit of risk. If you would invest 4,929 in Winpak on August 28, 2024 and sell it today you would earn a total of 125.00 from holding Winpak or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Winpak vs. North West
Performance |
| Timeline |
| Winpak |
| North West |
Winpak and North West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winpak and North West
The main advantage of trading using opposite Winpak and North West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winpak position performs unexpectedly, North West 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 North West will offset losses from the drop in North West's long position.| Winpak vs. HPQ Silicon Resources | Winpak vs. Champion Iron | Winpak vs. Osisko Metals | Winpak vs. Bip Investment Corp |
| North West vs. Covalon Technologies | North West vs. Sirona Biochem Corp | North West vs. Medicure | North West vs. Arch Biopartners |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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