Correlation Between AES Corp and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both AES Corp and Canadian Utilities 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 AES Corp and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AES Corp Unit and Canadian Utilities Limited, you can compare the effects of market volatilities on AES Corp and Canadian Utilities 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 AES Corp with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES Corp and Canadian Utilities.
Diversification Opportunities for AES Corp and Canadian Utilities
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AES and Canadian is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding AES Corp Unit and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and AES Corp 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 AES Corp Unit are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of AES Corp i.e., AES Corp and Canadian Utilities go up and down completely randomly.
Pair Corralation between AES Corp and Canadian Utilities
If you would invest 8,496 in AES Corp Unit on August 24, 2024 and sell it today you would earn a total of 0.00 from holding AES Corp Unit or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
AES Corp Unit vs. Canadian Utilities Limited
Performance |
| Timeline |
| AES Corp Unit |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Canadian Utilities |
AES Corp and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AES Corp and Canadian Utilities
The main advantage of trading using opposite AES Corp and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES Corp position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| AES Corp vs. The Cheesecake Factory | AES Corp vs. Dave Busters Entertainment | AES Corp vs. Omni Health | AES Corp vs. Amgen Inc |
| Canadian Utilities vs. TransAlta Corp | Canadian Utilities vs. Pampa Energia SA | Canadian Utilities vs. Vistra Energy Corp | Canadian Utilities vs. NRG Energy |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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