Correlation Between Canadian Pacific and CompoSecure
Can any of the company-specific risk be diversified away by investing in both Canadian Pacific and CompoSecure 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 CompoSecure 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 CompoSecure, you can compare the effects of market volatilities on Canadian Pacific and CompoSecure 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 CompoSecure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Pacific and CompoSecure.
Diversification Opportunities for Canadian Pacific and CompoSecure
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Canadian and CompoSecure is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Pacific Railway and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure 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 CompoSecure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompoSecure has no effect on the direction of Canadian Pacific i.e., Canadian Pacific and CompoSecure go up and down completely randomly.
Pair Corralation between Canadian Pacific and CompoSecure
Allowing for the 90-day total investment horizon Canadian Pacific is expected to generate 25.46 times less return on investment than CompoSecure. But when comparing it to its historical volatility, Canadian Pacific Railway is 2.68 times less risky than CompoSecure. It trades about 0.02 of its potential returns per unit of risk. CompoSecure is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 492.00 in CompoSecure on August 27, 2024 and sell it today you would earn a total of 1,112 from holding CompoSecure or generate 226.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Pacific Railway vs. CompoSecure
Performance |
| Timeline |
| Canadian Pacific Railway |
| CompoSecure |
Canadian Pacific and CompoSecure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Pacific and CompoSecure
The main advantage of trading using opposite Canadian Pacific and CompoSecure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Pacific position performs unexpectedly, CompoSecure 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 CompoSecure will offset losses from the drop in CompoSecure's long position.| Canadian Pacific vs. Union Pacific | Canadian Pacific vs. Norfolk Southern | Canadian Pacific vs. Westinghouse Air Brake | Canadian Pacific vs. Trinity Industries |
| CompoSecure vs. Northwest Pipe | CompoSecure vs. Insteel Industries | CompoSecure vs. Carpenter Technology | CompoSecure vs. ESAB Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |