Correlation Between Canadian Utilities and Pollard Banknote
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Pollard Banknote 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 Pollard Banknote 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 Pollard Banknote Limited, you can compare the effects of market volatilities on Canadian Utilities and Pollard Banknote 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 Pollard Banknote. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Pollard Banknote.
Diversification Opportunities for Canadian Utilities and Pollard Banknote
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Canadian and Pollard is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Ltd and Pollard Banknote Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollard Banknote 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 Pollard Banknote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollard Banknote has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Pollard Banknote go up and down completely randomly.
Pair Corralation between Canadian Utilities and Pollard Banknote
Assuming the 90 days trading horizon Canadian Utilities Ltd is expected to under-perform the Pollard Banknote. But the preferred stock apears to be less risky and, when comparing its historical volatility, Canadian Utilities Ltd is 2.01 times less risky than Pollard Banknote. The preferred stock trades about -0.14 of its potential returns per unit of risk. The Pollard Banknote Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,405 in Pollard Banknote Limited on August 29, 2024 and sell it today you would earn a total of 161.00 from holding Pollard Banknote Limited or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Ltd vs. Pollard Banknote Limited
Performance |
| Timeline |
| Canadian Utilities |
| Pollard Banknote |
Canadian Utilities and Pollard Banknote Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Pollard Banknote
The main advantage of trading using opposite Canadian Utilities and Pollard Banknote positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Pollard Banknote 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 Pollard Banknote will offset losses from the drop in Pollard Banknote's long position.| Canadian Utilities vs. Forstrong Global Income | Canadian Utilities vs. Terreno Resources Corp | Canadian Utilities vs. iShares Canadian HYBrid | Canadian Utilities vs. Brompton European Dividend |
| Pollard Banknote vs. Eros Resources Corp | Pollard Banknote vs. Apple Inc CDR | Pollard Banknote vs. European Residential Real | Pollard Banknote vs. Canadian Utilities Ltd |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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