Correlation Between Capital Power and Caribbean Utilities
Can any of the company-specific risk be diversified away by investing in both Capital Power and Caribbean Utilities 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 Capital Power and Caribbean Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Power and Caribbean Utilities, you can compare the effects of market volatilities on Capital Power and Caribbean Utilities 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 Capital Power with a short position of Caribbean Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Power and Caribbean Utilities.
Diversification Opportunities for Capital Power and Caribbean Utilities
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capital and Caribbean is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Capital Power and Caribbean Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribbean Utilities and Capital Power 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 Capital Power are associated (or correlated) with Caribbean Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribbean Utilities has no effect on the direction of Capital Power i.e., Capital Power and Caribbean Utilities go up and down completely randomly.
Pair Corralation between Capital Power and Caribbean Utilities
Assuming the 90 days trading horizon Capital Power is expected to generate 2.47 times more return on investment than Caribbean Utilities. However, Capital Power is 2.47 times more volatile than Caribbean Utilities. It trades about 0.32 of its potential returns per unit of risk. Caribbean Utilities is currently generating about -0.04 per unit of risk. If you would invest 5,099 in Capital Power on August 24, 2024 and sell it today you would earn a total of 960.00 from holding Capital Power or generate 18.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Power vs. Caribbean Utilities
Performance |
| Timeline |
| Capital Power |
| Caribbean Utilities |
Capital Power and Caribbean Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Power and Caribbean Utilities
The main advantage of trading using opposite Capital Power and Caribbean Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Power position performs unexpectedly, Caribbean Utilities 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 Caribbean Utilities will offset losses from the drop in Caribbean Utilities' long position.| Capital Power vs. Canadian Utilities Limited | Capital Power vs. Emera Inc | Capital Power vs. Keyera Corp | Capital Power vs. Northland Power |
| Caribbean Utilities vs. Fortis Inc | Caribbean Utilities vs. Algonquin Power Utilities | Caribbean Utilities vs. Capital Power | Caribbean Utilities vs. Forstrong Global Income |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |