Correlation Between Canadian Pacific and Alimentation Couchen
Can any of the company-specific risk be diversified away by investing in both Canadian Pacific and Alimentation Couchen 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 Pacific and Alimentation Couchen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Pacific Railway and Alimentation Couchen Tard, you can compare the effects of market volatilities on Canadian Pacific and Alimentation Couchen 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 Pacific with a short position of Alimentation Couchen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Pacific and Alimentation Couchen.
Diversification Opportunities for Canadian Pacific and Alimentation Couchen
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and Alimentation is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Pacific Railway and Alimentation Couchen Tard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimentation Couchen Tard and Canadian Pacific 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 Pacific Railway are associated (or correlated) with Alimentation Couchen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimentation Couchen Tard has no effect on the direction of Canadian Pacific i.e., Canadian Pacific and Alimentation Couchen go up and down completely randomly.
Pair Corralation between Canadian Pacific and Alimentation Couchen
Assuming the 90 days horizon Canadian Pacific is expected to generate 3.42 times less return on investment than Alimentation Couchen. But when comparing it to its historical volatility, Canadian Pacific Railway is 1.16 times less risky than Alimentation Couchen. It trades about 0.02 of its potential returns per unit of risk. Alimentation Couchen Tard is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,460 in Alimentation Couchen Tard on September 12, 2024 and sell it today you would earn a total of 1,638 from holding Alimentation Couchen Tard or generate 25.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Pacific Railway vs. Alimentation Couchen Tard
Performance |
| Timeline |
| Canadian Pacific Railway |
| Alimentation Couchen Tard |
Canadian Pacific and Alimentation Couchen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Pacific and Alimentation Couchen
The main advantage of trading using opposite Canadian Pacific and Alimentation Couchen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Pacific position performs unexpectedly, Alimentation Couchen 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 Alimentation Couchen will offset losses from the drop in Alimentation Couchen's long position.| Canadian Pacific vs. Canadian National Railway | Canadian Pacific vs. TC Energy Corp | Canadian Pacific vs. Fortis Inc | Canadian Pacific vs. Loblaw Companies Limited |
| Alimentation Couchen vs. Metro Inc | Alimentation Couchen vs. Dollarama | Alimentation Couchen vs. Nutrien | Alimentation Couchen vs. Canadian Pacific Railway |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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