Correlation Between Canadian Pacific and Finning International
Can any of the company-specific risk be diversified away by investing in both Canadian Pacific and Finning International 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 Finning International 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 Finning International, you can compare the effects of market volatilities on Canadian Pacific and Finning International 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 Finning International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Pacific and Finning International.
Diversification Opportunities for Canadian Pacific and Finning International
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Canadian and Finning is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Pacific Railway and Finning International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finning International 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 Finning International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finning International has no effect on the direction of Canadian Pacific i.e., Canadian Pacific and Finning International go up and down completely randomly.
Pair Corralation between Canadian Pacific and Finning International
Assuming the 90 days horizon Canadian Pacific is expected to generate 6.67 times less return on investment than Finning International. But when comparing it to its historical volatility, Canadian Pacific Railway is 1.44 times less risky than Finning International. It trades about 0.01 of its potential returns per unit of risk. Finning International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,098 in Finning International on August 27, 2024 and sell it today you would earn a total of 694.00 from holding Finning International or generate 22.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Pacific Railway vs. Finning International
Performance |
| Timeline |
| Canadian Pacific Railway |
| Finning International |
Canadian Pacific and Finning International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Pacific and Finning International
The main advantage of trading using opposite Canadian Pacific and Finning International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Pacific position performs unexpectedly, Finning International 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 Finning International will offset losses from the drop in Finning International'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 |
| Finning International vs. Toromont Industries | Finning International vs. Ritchie Bros Auctioneers | Finning International vs. Stantec | Finning International vs. Transcontinental |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |