Correlation Between Canfor and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Canfor 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 Canfor and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canfor and Canadian Utilities Limited, you can compare the effects of market volatilities on Canfor 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 Canfor with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canfor and Canadian Utilities.
Diversification Opportunities for Canfor and Canadian Utilities
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canfor and Canadian is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Canfor and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Canfor 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 Canfor 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 Canfor i.e., Canfor and Canadian Utilities go up and down completely randomly.
Pair Corralation between Canfor and Canadian Utilities
Assuming the 90 days trading horizon Canfor is expected to under-perform the Canadian Utilities. In addition to that, Canfor is 2.36 times more volatile than Canadian Utilities Limited. It trades about -0.02 of its total potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.01 per unit of volatility. If you would invest 3,390 in Canadian Utilities Limited on October 13, 2024 and sell it today you would earn a total of 19.00 from holding Canadian Utilities Limited or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canfor vs. Canadian Utilities Limited
Performance |
| Timeline |
| Canfor |
| Canadian Utilities |
Canfor and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canfor and Canadian Utilities
The main advantage of trading using opposite Canfor and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canfor 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.| Canfor vs. Canadian Utilities Limited | Canfor vs. Bausch Health Companies | Canfor vs. Constellation Software | Canfor vs. TUT Fitness Group |
| Canadian Utilities vs. Fortis Inc | Canadian Utilities vs. Emera Inc | Canadian Utilities vs. Algonquin Power Utilities | Canadian Utilities vs. ATCO |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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