Correlation Between Canadian Utilities and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Companhia Paranaense 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 Canadian Utilities and Companhia Paranaense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Limited and Companhia Paranaense de, you can compare the effects of market volatilities on Canadian Utilities and Companhia Paranaense 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 Canadian Utilities with a short position of Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Companhia Paranaense.
Diversification Opportunities for Canadian Utilities and Companhia Paranaense
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Canadian and Companhia is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense and Canadian Utilities 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 Canadian Utilities Limited are associated (or correlated) with Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Companhia Paranaense go up and down completely randomly.
Pair Corralation between Canadian Utilities and Companhia Paranaense
Assuming the 90 days horizon Canadian Utilities Limited is expected to generate 0.62 times more return on investment than Companhia Paranaense. However, Canadian Utilities Limited is 1.61 times less risky than Companhia Paranaense. It trades about -0.07 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about -0.19 per unit of risk. If you would invest 2,589 in Canadian Utilities Limited on August 24, 2024 and sell it today you would lose (43.00) from holding Canadian Utilities Limited or give up 1.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Companhia Paranaense de
Performance |
| Timeline |
| Canadian Utilities |
| Companhia Paranaense |
Canadian Utilities and Companhia Paranaense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Companhia Paranaense
The main advantage of trading using opposite Canadian Utilities and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Companhia Paranaense 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 Companhia Paranaense will offset losses from the drop in Companhia Paranaense's long position.| Canadian Utilities vs. TransAlta Corp | Canadian Utilities vs. Pampa Energia SA | Canadian Utilities vs. Vistra Energy Corp | Canadian Utilities vs. NRG Energy |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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