Correlation Between Fossil and Conifex Timber

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

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

Diversification Opportunities for Fossil and Conifex Timber

0.83

Correlation Coefficient

Fossil  Conifex Timber

Very poor diversification

The 3 months correlation between Fossil and Conifex is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fossil Group and Conifex Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conifex Timber and Fossil 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 Fossil Group are associated (or correlated) with Conifex Timber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conifex Timber has no effect on the direction of Fossil i.e., Fossil and Conifex Timber go up and down completely randomly.

Pair Corralation between Fossil and Conifex Timber

Given the investment horizon of 90 days Fossil is expected to generate 1.17 times less return on investment than Conifex Timber. In addition to that, Fossil is 1.12 times more volatile than Conifex Timber. It trades about 0.05 of its total potential returns per unit of risk. Conifex Timber is currently generating about 0.06 per unit of volatility. If you would invest  22.00  in Conifex Timber on March 23, 2025 and sell it today you would earn a total of  3.00  from holding Conifex Timber or generate 13.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.88%
Values	Daily Returns

Fossil Group  vs.  Conifex Timber

Fossil Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fossil Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Fossil disclosed solid returns over the last few months and may actually be approaching a breakup point.

Conifex Timber

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Conifex Timber are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Conifex Timber reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fossil and Conifex Timber

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

The idea behind Fossil Group and Conifex 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.