Correlation Between Canadian General and Supermarket Income
Can any of the company-specific risk be diversified away by investing in both Canadian General and Supermarket Income 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 Supermarket Income 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 Supermarket Income REIT, you can compare the effects of market volatilities on Canadian General and Supermarket Income 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 Supermarket Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Supermarket Income.
Diversification Opportunities for Canadian General and Supermarket Income
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canadian and Supermarket is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT 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 Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of Canadian General i.e., Canadian General and Supermarket Income go up and down completely randomly.
Pair Corralation between Canadian General and Supermarket Income
Assuming the 90 days trading horizon Canadian General Investments is expected to generate 0.9 times more return on investment than Supermarket Income. However, Canadian General Investments is 1.12 times less risky than Supermarket Income. It trades about 0.04 of its potential returns per unit of risk. Supermarket Income REIT is currently generating about -0.02 per unit of risk. If you would invest 186,697 in Canadian General Investments on November 2, 2024 and sell it today you would earn a total of 46,303 from holding Canadian General Investments or generate 24.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian General Investments vs. Supermarket Income REIT
Performance |
| Timeline |
| Canadian General Inv |
| Supermarket Income REIT |
Canadian General and Supermarket Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian General and Supermarket Income
The main advantage of trading using opposite Canadian General and Supermarket Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General position performs unexpectedly, Supermarket Income 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 Supermarket Income will offset losses from the drop in Supermarket Income's long position.| Canadian General vs. Air Products Chemicals | Canadian General vs. Central Asia Metals | Canadian General vs. Synthomer plc | Canadian General vs. Fulcrum Metals PLC |
| Supermarket Income vs. Cardinal Health | Supermarket Income vs. Sabien Technology Group | Supermarket Income vs. Ashtead Technology Holdings | Supermarket Income vs. DXC Technology Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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