Correlation Between Canadian Pacific and Wilhelmina
Can any of the company-specific risk be diversified away by investing in both Canadian Pacific and Wilhelmina 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 Wilhelmina 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 Wilhelmina, you can compare the effects of market volatilities on Canadian Pacific and Wilhelmina 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 Wilhelmina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Pacific and Wilhelmina.
Diversification Opportunities for Canadian Pacific and Wilhelmina
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canadian and Wilhelmina is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Pacific Railway and Wilhelmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilhelmina 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 Wilhelmina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilhelmina has no effect on the direction of Canadian Pacific i.e., Canadian Pacific and Wilhelmina go up and down completely randomly.
Pair Corralation between Canadian Pacific and Wilhelmina
Allowing for the 90-day total investment horizon Canadian Pacific Railway is expected to under-perform the Wilhelmina. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Pacific Railway is 3.76 times less risky than Wilhelmina. The stock trades about -0.03 of its potential returns per unit of risk. The Wilhelmina is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 445.00 in Wilhelmina on August 27, 2024 and sell it today you would lose (57.00) from holding Wilhelmina or give up 12.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Pacific Railway vs. Wilhelmina
Performance |
| Timeline |
| Canadian Pacific Railway |
| Wilhelmina |
Canadian Pacific and Wilhelmina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Pacific and Wilhelmina
The main advantage of trading using opposite Canadian Pacific and Wilhelmina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Pacific position performs unexpectedly, Wilhelmina 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 Wilhelmina will offset losses from the drop in Wilhelmina's long position.| Canadian Pacific vs. Union Pacific | Canadian Pacific vs. CSX Corporation | Canadian Pacific vs. Norfolk Southern | Canadian Pacific vs. Westinghouse Air Brake |
| Wilhelmina vs. Performant Financial | Wilhelmina vs. Network 1 Technologies | Wilhelmina vs. Rentokil Initial PLC | Wilhelmina vs. Mader Group Limited |
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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