Correlation Between Covalon Technologies and Loblaw Companies
Can any of the company-specific risk be diversified away by investing in both Covalon Technologies and Loblaw Companies 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 Covalon Technologies and Loblaw Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Covalon Technologies and Loblaw Companies Limited, you can compare the effects of market volatilities on Covalon Technologies and Loblaw Companies 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 Covalon Technologies with a short position of Loblaw Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Covalon Technologies and Loblaw Companies.
Diversification Opportunities for Covalon Technologies and Loblaw Companies
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Covalon and Loblaw is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Covalon Technologies and Loblaw Companies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loblaw Companies and Covalon Technologies 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 Covalon Technologies are associated (or correlated) with Loblaw Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loblaw Companies has no effect on the direction of Covalon Technologies i.e., Covalon Technologies and Loblaw Companies go up and down completely randomly.
Pair Corralation between Covalon Technologies and Loblaw Companies
Assuming the 90 days horizon Covalon Technologies is expected to generate 6.16 times more return on investment than Loblaw Companies. However, Covalon Technologies is 6.16 times more volatile than Loblaw Companies Limited. It trades about 0.1 of its potential returns per unit of risk. Loblaw Companies Limited is currently generating about 0.18 per unit of risk. If you would invest 124.00 in Covalon Technologies on September 20, 2024 and sell it today you would earn a total of 220.00 from holding Covalon Technologies or generate 177.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Covalon Technologies vs. Loblaw Companies Limited
Performance |
| Timeline |
| Covalon Technologies |
| Loblaw Companies |
Covalon Technologies and Loblaw Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Covalon Technologies and Loblaw Companies
The main advantage of trading using opposite Covalon Technologies and Loblaw Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Covalon Technologies position performs unexpectedly, Loblaw Companies 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 Loblaw Companies will offset losses from the drop in Loblaw Companies' long position.| Covalon Technologies vs. JPMorgan Chase Co | Covalon Technologies vs. Bank of America | Covalon Technologies vs. Toronto Dominion Bank | Covalon Technologies vs. Royal Bank of |
| Loblaw Companies vs. Covalon Technologies | Loblaw Companies vs. Sirona Biochem Corp | Loblaw Companies vs. Medicure | Loblaw Companies vs. Arch Biopartners |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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