Correlation Between Bip Investment and Canlan Ice
Can any of the company-specific risk be diversified away by investing in both Bip Investment and Canlan Ice 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 Bip Investment and Canlan Ice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bip Investment Corp and Canlan Ice Sports, you can compare the effects of market volatilities on Bip Investment and Canlan Ice 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 Bip Investment with a short position of Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bip Investment and Canlan Ice.
Diversification Opportunities for Bip Investment and Canlan Ice
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bip and Canlan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bip Investment Corp and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports and Bip Investment 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 Bip Investment Corp are associated (or correlated) with Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of Bip Investment i.e., Bip Investment and Canlan Ice go up and down completely randomly.
Pair Corralation between Bip Investment and Canlan Ice
Assuming the 90 days trading horizon Bip Investment is expected to generate 1.19 times less return on investment than Canlan Ice. But when comparing it to its historical volatility, Bip Investment Corp is 1.98 times less risky than Canlan Ice. It trades about 0.09 of its potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 371.00 in Canlan Ice Sports on September 3, 2024 and sell it today you would earn a total of 39.00 from holding Canlan Ice Sports or generate 10.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bip Investment Corp vs. Canlan Ice Sports
Performance |
| Timeline |
| Bip Investment Corp |
| Canlan Ice Sports |
Bip Investment and Canlan Ice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bip Investment and Canlan Ice
The main advantage of trading using opposite Bip Investment and Canlan Ice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bip Investment position performs unexpectedly, Canlan Ice 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 Canlan Ice will offset losses from the drop in Canlan Ice's long position.The idea behind Bip Investment Corp and Canlan Ice Sports 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.
| Canlan Ice vs. BMTC Group | Canlan Ice vs. Caldwell Partners International | Canlan Ice vs. TWC Enterprises | Canlan Ice vs. Madison Pacific Properties |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |