Correlation Between Enviva Partners and West Fraser

Can any of the company-specific risk be diversified away by investing in both Enviva Partners and West Fraser 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 West Fraser 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 West Fraser Timber, you can compare the effects of market volatilities on Enviva Partners and West Fraser 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 West Fraser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enviva Partners and West Fraser.

Diversification Opportunities for Enviva Partners and West Fraser

0.0

Correlation Coefficient

Enviva Partners  West Fraser

Pay attention - limited upside

The 3 months correlation between Enviva and West is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Enviva Partners LP and West Fraser Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Fraser Timber 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 West Fraser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Fraser Timber has no effect on the direction of Enviva Partners i.e., Enviva Partners and West Fraser go up and down completely randomly.

Pair Corralation between Enviva Partners and West Fraser

If you would invest (100.00) in Enviva Partners LP on December 24, 2024 and sell it today you would earn a total of  100.00  from holding Enviva Partners LP or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Enviva Partners LP  vs.  West Fraser Timber

Enviva Partners LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enviva Partners LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Enviva Partners is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

West Fraser Timber

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Enviva Partners and West Fraser

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

The idea behind Enviva Partners LP and West Fraser Timber 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.