Correlation Between Enviva Partners and Canfor

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

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

Diversification Opportunities for Enviva Partners and Canfor

0.17

Correlation Coefficient

Enviva Partners  Canfor

Average diversification

The 3 months correlation between Enviva and Canfor is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Enviva Partners LP and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor and Enviva Partners 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 Enviva Partners LP 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 Enviva Partners i.e., Enviva Partners and Canfor go up and down completely randomly.

Pair Corralation between Enviva Partners and Canfor

Considering the 90-day investment horizon Enviva Partners LP is expected to generate 0.59 times more return on investment than Canfor. However, Enviva Partners LP is 1.7 times less risky than Canfor. It trades about 0.65 of its potential returns per unit of risk. Canfor is currently generating about -0.11 per unit of risk. If you would invest  40.00  in Enviva Partners LP on September 27, 2024 and sell it today you would earn a total of  2.00  from holding Enviva Partners LP or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	9.52%
Values	Daily Returns

Enviva Partners LP  vs.  Canfor

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.

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.

Pair Trading with Enviva Partners and Canfor

The main advantage of trading using opposite Enviva Partners and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enviva Partners 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.

The idea behind Enviva Partners LP and Canfor 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.