Correlation Between Cargojet and Exchange Income
Can any of the company-specific risk be diversified away by investing in both Cargojet and Exchange 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 Cargojet and Exchange Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cargojet and Exchange Income, you can compare the effects of market volatilities on Cargojet and Exchange 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 Cargojet with a short position of Exchange Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cargojet and Exchange Income.
Diversification Opportunities for Cargojet and Exchange Income
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cargojet and Exchange is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cargojet and Exchange Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Income and Cargojet 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 Cargojet are associated (or correlated) with Exchange Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Income has no effect on the direction of Cargojet i.e., Cargojet and Exchange Income go up and down completely randomly.
Pair Corralation between Cargojet and Exchange Income
Assuming the 90 days trading horizon Cargojet is expected to under-perform the Exchange Income. In addition to that, Cargojet is 3.15 times more volatile than Exchange Income. It trades about -0.22 of its total potential returns per unit of risk. Exchange Income is currently generating about 0.31 per unit of volatility. If you would invest 5,442 in Exchange Income on August 29, 2024 and sell it today you would earn a total of 245.00 from holding Exchange Income or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cargojet vs. Exchange Income
Performance |
| Timeline |
| Cargojet |
| Exchange Income |
Cargojet and Exchange Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cargojet and Exchange Income
The main advantage of trading using opposite Cargojet and Exchange Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cargojet position performs unexpectedly, Exchange 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 Exchange Income will offset losses from the drop in Exchange Income's long position.The idea behind Cargojet and Exchange Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Exchange Income vs. Capital Power | Exchange Income vs. Keyera Corp | Exchange Income vs. Parkland Fuel | Exchange Income vs. TFI International |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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