Correlation Between CapitaLand Investment and NorthWestern
Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and NorthWestern 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 CapitaLand Investment and NorthWestern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CapitaLand Investment Limited and NorthWestern, you can compare the effects of market volatilities on CapitaLand Investment and NorthWestern 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 CapitaLand Investment with a short position of NorthWestern. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and NorthWestern.
Diversification Opportunities for CapitaLand Investment and NorthWestern
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CapitaLand and NorthWestern is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and NorthWestern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthWestern and CapitaLand Investment 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 CapitaLand Investment Limited are associated (or correlated) with NorthWestern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthWestern has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and NorthWestern go up and down completely randomly.
Pair Corralation between CapitaLand Investment and NorthWestern
Assuming the 90 days horizon CapitaLand Investment Limited is expected to generate 3.78 times more return on investment than NorthWestern. However, CapitaLand Investment is 3.78 times more volatile than NorthWestern. It trades about 0.01 of its potential returns per unit of risk. NorthWestern is currently generating about 0.02 per unit of risk. If you would invest 218.00 in CapitaLand Investment Limited on August 26, 2024 and sell it today you would lose (36.00) from holding CapitaLand Investment Limited or give up 16.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CapitaLand Investment Limited vs. NorthWestern
Performance |
| Timeline |
| CapitaLand Investment |
| NorthWestern |
CapitaLand Investment and NorthWestern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapitaLand Investment and NorthWestern
The main advantage of trading using opposite CapitaLand Investment and NorthWestern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, NorthWestern 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 NorthWestern will offset losses from the drop in NorthWestern's long position.| CapitaLand Investment vs. IRSA Inversiones Y | CapitaLand Investment vs. Anywhere Real Estate | CapitaLand Investment vs. Newmark Group | CapitaLand Investment vs. New York City |
| NorthWestern vs. Allete Inc | NorthWestern vs. Black Hills | NorthWestern vs. Otter Tail | NorthWestern vs. Avista |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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