Correlation Between Canfor and Labrador Iron

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

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

Diversification Opportunities for Canfor and Labrador Iron

0.27

Correlation Coefficient

Canfor  Labrador Iron

Modest diversification

The 3 months correlation between Canfor and Labrador is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Canfor and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore and Canfor 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 Canfor are associated (or correlated) with Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of Canfor i.e., Canfor and Labrador Iron go up and down completely randomly.

Pair Corralation between Canfor and Labrador Iron

Assuming the 90 days horizon Canfor is expected to under-perform the Labrador Iron. In addition to that, Canfor is 1.46 times more volatile than Labrador Iron Ore. It trades about -0.16 of its total potential returns per unit of risk. Labrador Iron Ore is currently generating about 0.0 per unit of volatility. If you would invest  2,035  in Labrador Iron Ore on July 5, 2025 and sell it today you would lose (13.00) from holding Labrador Iron Ore or give up 0.64% of portfolio value over 90 days.

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

Canfor  vs.  Labrador Iron Ore

Canfor

Risk-Adjusted Performance

Weakest

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 November 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Labrador Iron Ore

Risk-Adjusted Performance

Weakest

Over the last 90 days Labrador Iron Ore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Labrador Iron is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Canfor and Labrador Iron

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

The idea behind Canfor and Labrador Iron Ore 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 Commodity Directory module to find actively traded commodities issued by global exchanges.