Correlation Between Canaf Investments and Automotive Finco
Can any of the company-specific risk be diversified away by investing in both Canaf Investments and Automotive Finco 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 Automotive Finco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canaf Investments and Automotive Finco Corp, you can compare the effects of market volatilities on Canaf Investments and Automotive Finco 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 Automotive Finco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canaf Investments and Automotive Finco.
Diversification Opportunities for Canaf Investments and Automotive Finco
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canaf and Automotive is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Canaf Investments and Automotive Finco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automotive Finco Corp 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 Automotive Finco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automotive Finco Corp has no effect on the direction of Canaf Investments i.e., Canaf Investments and Automotive Finco go up and down completely randomly.
Pair Corralation between Canaf Investments and Automotive Finco
Assuming the 90 days horizon Canaf Investments is expected to generate 1.13 times less return on investment than Automotive Finco. But when comparing it to its historical volatility, Canaf Investments is 1.48 times less risky than Automotive Finco. It trades about 0.08 of its potential returns per unit of risk. Automotive Finco Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 52.00 in Automotive Finco Corp on September 4, 2024 and sell it today you would earn a total of 34.00 from holding Automotive Finco Corp or generate 65.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Canaf Investments vs. Automotive Finco Corp
Performance |
| Timeline |
| Canaf Investments |
| Automotive Finco Corp |
Canaf Investments and Automotive Finco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canaf Investments and Automotive Finco
The main advantage of trading using opposite Canaf Investments and Automotive Finco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canaf Investments position performs unexpectedly, Automotive Finco 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 Automotive Finco will offset losses from the drop in Automotive Finco's long position.| Canaf Investments vs. First Majestic Silver | Canaf Investments vs. Ivanhoe Energy | Canaf Investments vs. Orezone Gold Corp | Canaf Investments vs. Faraday Copper Corp |
| Automotive Finco vs. Slate Grocery REIT | Automotive Finco vs. Roots Corp | Automotive Finco vs. Aimia Inc | Automotive Finco vs. Morguard Real Estate |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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