Correlation Between Canadian General and Cornish Metals
Can any of the company-specific risk be diversified away by investing in both Canadian General and Cornish Metals 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 General and Cornish Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian General Investments and Cornish Metals, you can compare the effects of market volatilities on Canadian General and Cornish Metals 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 General with a short position of Cornish Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Cornish Metals.
Diversification Opportunities for Canadian General and Cornish Metals
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Canadian and Cornish is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals and Canadian General 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 General Investments are associated (or correlated) with Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of Canadian General i.e., Canadian General and Cornish Metals go up and down completely randomly.
Pair Corralation between Canadian General and Cornish Metals
Assuming the 90 days trading horizon Canadian General Investments is expected to generate 0.94 times more return on investment than Cornish Metals. However, Canadian General Investments is 1.07 times less risky than Cornish Metals. It trades about -0.04 of its potential returns per unit of risk. Cornish Metals is currently generating about -0.2 per unit of risk. If you would invest 225,000 in Canadian General Investments on November 9, 2024 and sell it today you would lose (6,000) from holding Canadian General Investments or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian General Investments vs. Cornish Metals
Performance |
| Timeline |
| Canadian General Inv |
| Cornish Metals |
Canadian General and Cornish Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian General and Cornish Metals
The main advantage of trading using opposite Canadian General and Cornish Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General position performs unexpectedly, Cornish Metals 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 Cornish Metals will offset losses from the drop in Cornish Metals' long position.| Canadian General vs. UNIQA Insurance Group | Canadian General vs. Sabre Insurance Group | Canadian General vs. Zurich Insurance Group | Canadian General vs. International Consolidated Airlines |
| Cornish Metals vs. Check Point Software | Cornish Metals vs. Heavitree Brewery | Cornish Metals vs. Spotify Technology SA | Cornish Metals vs. Sabien Technology Group |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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