Correlation Between Canaf Investments and Alaska Energy
Can any of the company-specific risk be diversified away by investing in both Canaf Investments and Alaska Energy 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 Canaf Investments and Alaska Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canaf Investments and Alaska Energy Metals, you can compare the effects of market volatilities on Canaf Investments and Alaska Energy 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 Canaf Investments with a short position of Alaska Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canaf Investments and Alaska Energy.
Diversification Opportunities for Canaf Investments and Alaska Energy
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canaf and Alaska is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Canaf Investments and Alaska Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Energy Metals and Canaf Investments 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 Canaf Investments are associated (or correlated) with Alaska Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Energy Metals has no effect on the direction of Canaf Investments i.e., Canaf Investments and Alaska Energy go up and down completely randomly.
Pair Corralation between Canaf Investments and Alaska Energy
Assuming the 90 days horizon Canaf Investments is expected to generate 0.6 times more return on investment than Alaska Energy. However, Canaf Investments is 1.67 times less risky than Alaska Energy. It trades about 0.12 of its potential returns per unit of risk. Alaska Energy Metals is currently generating about -0.02 per unit of risk. If you would invest 27.00 in Canaf Investments on November 2, 2024 and sell it today you would earn a total of 13.00 from holding Canaf Investments or generate 48.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canaf Investments vs. Alaska Energy Metals
Performance |
| Timeline |
| Canaf Investments |
| Alaska Energy Metals |
Canaf Investments and Alaska Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canaf Investments and Alaska Energy
The main advantage of trading using opposite Canaf Investments and Alaska Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canaf Investments position performs unexpectedly, Alaska Energy 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 Alaska Energy will offset losses from the drop in Alaska Energy's long position.| Canaf Investments vs. Quipt Home Medical | Canaf Investments vs. Brookfield Office Properties | Canaf Investments vs. Brookfield Investments | Canaf Investments vs. Contagious Gaming |
| Alaska Energy vs. Canadian General Investments | Alaska Energy vs. Pace Metals | Alaska Energy vs. Canaf Investments | Alaska Energy vs. Mako Mining Corp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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