Correlation Between Canadian Utilities and Keyera Corp
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Keyera Corp 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 Keyera Corp 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 Keyera Corp, you can compare the effects of market volatilities on Canadian Utilities and Keyera Corp 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 Keyera Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Keyera Corp.
Diversification Opportunities for Canadian Utilities and Keyera Corp
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canadian and Keyera is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Keyera Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyera Corp 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 Keyera Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyera Corp has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Keyera Corp go up and down completely randomly.
Pair Corralation between Canadian Utilities and Keyera Corp
Assuming the 90 days horizon Canadian Utilities is expected to generate 1.67 times less return on investment than Keyera Corp. In addition to that, Canadian Utilities is 1.03 times more volatile than Keyera Corp. It trades about 0.11 of its total potential returns per unit of risk. Keyera Corp is currently generating about 0.18 per unit of volatility. If you would invest 3,025 in Keyera Corp on August 25, 2024 and sell it today you would earn a total of 1,714 from holding Keyera Corp or generate 56.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Keyera Corp
Performance |
| Timeline |
| Canadian Utilities |
| Keyera Corp |
Canadian Utilities and Keyera Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Keyera Corp
The main advantage of trading using opposite Canadian Utilities and Keyera Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Keyera Corp 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 Keyera Corp will offset losses from the drop in Keyera Corp's long position.| Canadian Utilities vs. Fortis Inc | Canadian Utilities vs. Emera Inc | Canadian Utilities vs. Algonquin Power Utilities | Canadian Utilities vs. ATCO |
| Keyera Corp vs. Pembina Pipeline Corp | Keyera Corp vs. Capital Power | Keyera Corp vs. AltaGas | Keyera Corp vs. Canadian Utilities Limited |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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