Correlation Between Canadian Utilities and Themac Resources
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Themac 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 Themac 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 Themac Resources Group, you can compare the effects of market volatilities on Canadian Utilities and Themac 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 Themac Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Themac Resources.
Diversification Opportunities for Canadian Utilities and Themac Resources
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Canadian and Themac is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac 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 Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Themac Resources go up and down completely randomly.
Pair Corralation between Canadian Utilities and Themac Resources
Assuming the 90 days horizon Canadian Utilities Limited is expected to under-perform the Themac Resources. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Utilities Limited is 23.02 times less risky than Themac Resources. The stock trades about -0.13 of its potential returns per unit of risk. The Themac Resources Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Themac Resources Group on November 3, 2024 and sell it today you would earn a total of 4.00 from holding Themac Resources Group or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Themac Resources Group
Performance |
| Timeline |
| Canadian Utilities |
| Themac Resources |
Canadian Utilities and Themac Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Themac Resources
The main advantage of trading using opposite Canadian Utilities and Themac Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Themac 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 Themac Resources will offset losses from the drop in Themac Resources' long position.| Canadian Utilities vs. Fortis Inc | Canadian Utilities vs. Emera Inc | Canadian Utilities vs. Algonquin Power Utilities | Canadian Utilities vs. ATCO |
| Themac Resources vs. Plaza Retail REIT | Themac Resources vs. Toronto Dominion Bank | Themac Resources vs. TGS Esports | Themac Resources vs. Pollard Banknote 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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