Correlation Between Canadian Utilities and Diamond Fields
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Diamond Fields 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 Diamond Fields 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 Diamond Fields Resources, you can compare the effects of market volatilities on Canadian Utilities and Diamond Fields 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 Diamond Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Diamond Fields.
Diversification Opportunities for Canadian Utilities and Diamond Fields
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Canadian and Diamond is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Diamond Fields Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Fields 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 Diamond Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Fields Resources has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Diamond Fields go up and down completely randomly.
Pair Corralation between Canadian Utilities and Diamond Fields
Assuming the 90 days horizon Canadian Utilities is expected to generate 7.49 times less return on investment than Diamond Fields. But when comparing it to its historical volatility, Canadian Utilities Limited is 8.99 times less risky than Diamond Fields. It trades about 0.05 of its potential returns per unit of risk. Diamond Fields Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Diamond Fields Resources on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Diamond Fields Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Diamond Fields Resources
Performance |
| Timeline |
| Canadian Utilities |
| Diamond Fields Resources |
Canadian Utilities and Diamond Fields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Diamond Fields
The main advantage of trading using opposite Canadian Utilities and Diamond Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Diamond Fields 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 Diamond Fields will offset losses from the drop in Diamond Fields' long position.| Canadian Utilities vs. Fortis Inc | Canadian Utilities vs. Emera Inc | Canadian Utilities vs. Algonquin Power Utilities | Canadian Utilities vs. ATCO |
| Diamond Fields vs. Capstone Mining Corp | Diamond Fields vs. US Financial 15 | Diamond Fields vs. Laurentian Bank | Diamond Fields vs. Endeavour Silver 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |