Correlation Between Canoo Holdings and Canfor

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

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

Diversification Opportunities for Canoo Holdings and Canfor

-0.64

Correlation Coefficient

Canoo Holdings  Canfor

Excellent diversification

The 3 months correlation between Canoo and Canfor is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Holdings and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor and Canoo Holdings 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 Canoo Holdings 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 Canoo Holdings i.e., Canoo Holdings and Canfor go up and down completely randomly.

Pair Corralation between Canoo Holdings and Canfor

Assuming the 90 days horizon Canoo Holdings is expected to under-perform the Canfor. In addition to that, Canoo Holdings is 4.31 times more volatile than Canfor. It trades about -0.1 of its total potential returns per unit of risk. Canfor is currently generating about 0.14 per unit of volatility. If you would invest  1,063  in Canfor on August 31, 2024 and sell it today you would earn a total of  221.00  from holding Canfor or generate 20.79% return on investment over 90 days.

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

Canoo Holdings  vs.  Canfor

Canoo Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canoo Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Canfor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canfor are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Canfor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canoo Holdings and Canfor

The main advantage of trading using opposite Canoo Holdings and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canoo Holdings 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 Canoo Holdings 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.