Correlation Between Canadian General and Economic Investment
Can any of the company-specific risk be diversified away by investing in both Canadian General and Economic Investment 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 Economic Investment 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 Economic Investment Trust, you can compare the effects of market volatilities on Canadian General and Economic Investment 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 Economic Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Economic Investment.
Diversification Opportunities for Canadian General and Economic Investment
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Canadian and Economic is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Economic Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Economic Investment Trust 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 Economic Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Economic Investment Trust has no effect on the direction of Canadian General i.e., Canadian General and Economic Investment go up and down completely randomly.
Pair Corralation between Canadian General and Economic Investment
Assuming the 90 days trading horizon Canadian General Investments is expected to under-perform the Economic Investment. But the stock apears to be less risky and, when comparing its historical volatility, Canadian General Investments is 1.41 times less risky than Economic Investment. The stock trades about -0.05 of its potential returns per unit of risk. The Economic Investment Trust is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 17,416 in Economic Investment Trust on October 22, 2024 and sell it today you would earn a total of 284.00 from holding Economic Investment Trust or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Canadian General Investments vs. Economic Investment Trust
Performance |
| Timeline |
| Canadian General Inv |
| Economic Investment Trust |
Canadian General and Economic Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian General and Economic Investment
The main advantage of trading using opposite Canadian General and Economic Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General position performs unexpectedly, Economic Investment 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 Economic Investment will offset losses from the drop in Economic Investment's long position.| Canadian General vs. Uniteds Limited | Canadian General vs. Economic Investment Trust | Canadian General vs. abrdn Asia Pacific | Canadian General vs. Clairvest Group |
| Economic Investment vs. Uniteds Limited | Economic Investment vs. E L Financial Corp | Economic Investment vs. Canadian General Investments | Economic Investment vs. Clairvest 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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