Correlation Between CCL Industries and George Weston

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

By analyzing existing cross correlation between CCL Industries and George Weston Limited, you can compare the effects of market volatilities on CCL Industries and George Weston 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 CCL Industries with a short position of George Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and George Weston.

Diversification Opportunities for CCL Industries and George Weston

0.29

Correlation Coefficient

CCL Industries  George Weston

Modest diversification

The 3 months correlation between CCL and George is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and George Weston Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Weston Limited and CCL Industries 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 CCL Industries are associated (or correlated) with George Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Weston Limited has no effect on the direction of CCL Industries i.e., CCL Industries and George Weston go up and down completely randomly.

Pair Corralation between CCL Industries and George Weston

Assuming the 90 days trading horizon CCL Industries is expected to under-perform the George Weston. In addition to that, CCL Industries is 1.05 times more volatile than George Weston Limited. It trades about -0.06 of its total potential returns per unit of risk. George Weston Limited is currently generating about 0.03 per unit of volatility. If you would invest  22,427  in George Weston Limited on November 29, 2024 and sell it today you would earn a total of  358.00  from holding George Weston Limited or generate 1.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CCL Industries  vs.  George Weston Limited

CCL Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days CCL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CCL Industries is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

George Weston Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in George Weston Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, George Weston is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CCL Industries and George Weston

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

The idea behind CCL Industries and George Weston Limited 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.