Correlation Between Canadian Utilities and Apple
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Apple 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 Utilities and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Ltd and Apple Inc CDR, you can compare the effects of market volatilities on Canadian Utilities and Apple 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 Utilities with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Apple.
Diversification Opportunities for Canadian Utilities and Apple
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Canadian and Apple is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Ltd and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR and Canadian Utilities 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 Utilities Ltd are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Apple go up and down completely randomly.
Pair Corralation between Canadian Utilities and Apple
Assuming the 90 days trading horizon Canadian Utilities is expected to generate 8.38 times less return on investment than Apple. In addition to that, Canadian Utilities is 1.36 times more volatile than Apple Inc CDR. It trades about 0.02 of its total potential returns per unit of risk. Apple Inc CDR is currently generating about 0.25 per unit of volatility. If you would invest 3,311 in Apple Inc CDR on September 1, 2024 and sell it today you would earn a total of 164.00 from holding Apple Inc CDR or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Canadian Utilities Ltd vs. Apple Inc CDR
Performance |
| Timeline |
| Canadian Utilities |
| Apple Inc CDR |
Canadian Utilities and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Apple
The main advantage of trading using opposite Canadian Utilities and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Canadian Utilities vs. Altair Resources | Canadian Utilities vs. Arizona Metals Corp | Canadian Utilities vs. DRI Healthcare Trust | Canadian Utilities vs. Talon Metals 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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