Correlation Between West Fraser and ATS P

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

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

Diversification Opportunities for West Fraser and ATS P

-0.07

Correlation Coefficient

West Fraser  ATS P

Good diversification

The 3 months correlation between West and ATS is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding West Fraser Timber and ATS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATS P and West Fraser 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 West Fraser Timber are associated (or correlated) with ATS P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATS P has no effect on the direction of West Fraser i.e., West Fraser and ATS P go up and down completely randomly.

Pair Corralation between West Fraser and ATS P

Assuming the 90 days trading horizon West Fraser is expected to generate 11.79 times less return on investment than ATS P. But when comparing it to its historical volatility, West Fraser Timber is 2.1 times less risky than ATS P. It trades about 0.02 of its potential returns per unit of risk. ATS P is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,505  in ATS P on April 25, 2025 and sell it today you would earn a total of  752.00  from holding ATS P or generate 21.46% return on investment over 90 days.

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

West Fraser Timber  vs.  ATS P

West Fraser Timber

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in West Fraser Timber are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, West Fraser is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ATS P

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATS P are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ATS P displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with West Fraser and ATS P

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

The idea behind West Fraser Timber and ATS P 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.