Correlation Between Canadian Utilities and Ascot Resources
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Ascot Resources 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 Ascot Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Limited and Ascot Resources, you can compare the effects of market volatilities on Canadian Utilities and Ascot Resources 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 Ascot Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Ascot Resources.
Diversification Opportunities for Canadian Utilities and Ascot Resources
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Canadian and Ascot is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Ascot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascot Resources 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 Limited are associated (or correlated) with Ascot Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascot Resources has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Ascot Resources go up and down completely randomly.
Pair Corralation between Canadian Utilities and Ascot Resources
Assuming the 90 days horizon Canadian Utilities Limited is expected to generate 0.17 times more return on investment than Ascot Resources. However, Canadian Utilities Limited is 5.72 times less risky than Ascot Resources. It trades about 0.02 of its potential returns per unit of risk. Ascot Resources is currently generating about -0.01 per unit of risk. If you would invest 3,323 in Canadian Utilities Limited on September 13, 2024 and sell it today you would earn a total of 264.00 from holding Canadian Utilities Limited or generate 7.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Ascot Resources
Performance |
| Timeline |
| Canadian Utilities |
| Ascot Resources |
Canadian Utilities and Ascot Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Ascot Resources
The main advantage of trading using opposite Canadian Utilities and Ascot Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Ascot Resources 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 Ascot Resources will offset losses from the drop in Ascot Resources' long position.| Canadian Utilities vs. Fortis Inc | Canadian Utilities vs. Emera Inc | Canadian Utilities vs. Algonquin Power Utilities | Canadian Utilities vs. ATCO |
| Ascot Resources vs. Profound Medical Corp | Ascot Resources vs. Canadian Utilities Limited | Ascot Resources vs. HOME DEPOT CDR | Ascot Resources vs. Bird Construction |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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