Correlation Between Canlan Ice and Origin Materials
Can any of the company-specific risk be diversified away by investing in both Canlan Ice and Origin Materials 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 Canlan Ice and Origin Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canlan Ice Sports and Origin Materials, you can compare the effects of market volatilities on Canlan Ice and Origin Materials 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 Canlan Ice with a short position of Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Origin Materials.
Diversification Opportunities for Canlan Ice and Origin Materials
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canlan and Origin is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials and Canlan Ice 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 Canlan Ice Sports are associated (or correlated) with Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials has no effect on the direction of Canlan Ice i.e., Canlan Ice and Origin Materials go up and down completely randomly.
Pair Corralation between Canlan Ice and Origin Materials
Assuming the 90 days horizon Canlan Ice is expected to generate 19.19 times less return on investment than Origin Materials. But when comparing it to its historical volatility, Canlan Ice Sports is 50.22 times less risky than Origin Materials. It trades about 0.14 of its potential returns per unit of risk. Origin Materials is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 63.00 in Origin Materials on November 9, 2024 and sell it today you would earn a total of 27.00 from holding Origin Materials or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Canlan Ice Sports vs. Origin Materials
Performance |
| Timeline |
| Canlan Ice Sports |
| Origin Materials |
Canlan Ice and Origin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and Origin Materials
The main advantage of trading using opposite Canlan Ice and Origin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice position performs unexpectedly, Origin Materials 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 Origin Materials will offset losses from the drop in Origin Materials' long position.| Canlan Ice vs. BCE Inc | Canlan Ice vs. PepsiCo | Canlan Ice vs. Diageo PLC ADR | Canlan Ice vs. The Coca Cola |
| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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