Correlation Between Canadian Utilities and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Medical Facilities 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 Medical Facilities 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 Medical Facilities, you can compare the effects of market volatilities on Canadian Utilities and Medical Facilities 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 Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Medical Facilities.
Diversification Opportunities for Canadian Utilities and Medical Facilities
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canadian and Medical is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Medical Facilities go up and down completely randomly.
Pair Corralation between Canadian Utilities and Medical Facilities
Assuming the 90 days horizon Canadian Utilities Limited is expected to under-perform the Medical Facilities. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Utilities Limited is 1.57 times less risky than Medical Facilities. The stock trades about -0.09 of its potential returns per unit of risk. The Medical Facilities is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,555 in Medical Facilities on September 21, 2024 and sell it today you would earn a total of 12.00 from holding Medical Facilities or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Medical Facilities
Performance |
| Timeline |
| Canadian Utilities |
| Medical Facilities |
Canadian Utilities and Medical Facilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Medical Facilities
The main advantage of trading using opposite Canadian Utilities and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.| Canadian Utilities vs. Fortis Inc | Canadian Utilities vs. Emera Inc | Canadian Utilities vs. Algonquin Power Utilities | Canadian Utilities vs. ATCO |
| Medical Facilities vs. Sienna Senior Living | Medical Facilities vs. Rogers Sugar | Medical Facilities vs. Chemtrade Logistics Income | Medical Facilities vs. Exchange 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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