Correlation Between Canfor and Enviva Partners

Can any of the company-specific risk be diversified away by investing in both Canfor and Enviva Partners 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 Canfor and Enviva Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canfor and Enviva Partners LP, you can compare the effects of market volatilities on Canfor and Enviva Partners 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 Canfor with a short position of Enviva Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canfor and Enviva Partners.

Diversification Opportunities for Canfor and Enviva Partners

0.17

Correlation Coefficient

Canfor  Enviva Partners

Average diversification

The 3 months correlation between Canfor and Enviva is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Canfor and Enviva Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enviva Partners LP and Canfor 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 Canfor are associated (or correlated) with Enviva Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enviva Partners LP has no effect on the direction of Canfor i.e., Canfor and Enviva Partners go up and down completely randomly.

Pair Corralation between Canfor and Enviva Partners

If you would invest  42.00  in Enviva Partners LP on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Enviva Partners LP or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Canfor  vs.  Enviva Partners LP

Canfor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canfor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Enviva Partners LP

Risk-Adjusted Performance

0 of 100

Excellent

Over the last 90 days Enviva Partners LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat inconsistent basic indicators, Enviva Partners sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canfor and Enviva Partners

The main advantage of trading using opposite Canfor and Enviva Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canfor position performs unexpectedly, Enviva Partners 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 Enviva Partners will offset losses from the drop in Enviva Partners' long position.

The idea behind Canfor and Enviva Partners LP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.