Correlation Between Canadian Utilities and Ramp Metals
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Ramp Metals 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 Ramp Metals 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 Ramp Metals, you can compare the effects of market volatilities on Canadian Utilities and Ramp Metals 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 Ramp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Ramp Metals.
Diversification Opportunities for Canadian Utilities and Ramp Metals
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Canadian and Ramp is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Ramp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramp Metals 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 Ramp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramp Metals has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Ramp Metals go up and down completely randomly.
Pair Corralation between Canadian Utilities and Ramp Metals
Assuming the 90 days horizon Canadian Utilities is expected to generate 72.34 times less return on investment than Ramp Metals. But when comparing it to its historical volatility, Canadian Utilities Limited is 20.51 times less risky than Ramp Metals. It trades about 0.02 of its potential returns per unit of risk. Ramp Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Ramp Metals on August 24, 2024 and sell it today you would earn a total of 52.00 from holding Ramp Metals or generate 273.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 34.34% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Ramp Metals
Performance |
| Timeline |
| Canadian Utilities |
| Ramp Metals |
Canadian Utilities and Ramp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Ramp Metals
The main advantage of trading using opposite Canadian Utilities and Ramp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Ramp Metals 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 Ramp Metals will offset losses from the drop in Ramp Metals' long position.| Canadian Utilities vs. Fortis Inc | Canadian Utilities vs. Algonquin Power Utilities | Canadian Utilities vs. Capital Power | Canadian Utilities vs. Forstrong Global Income |
| Ramp Metals vs. Ivanhoe Mines | Ramp Metals vs. Filo Mining Corp | Ramp Metals vs. Calibre Mining Corp | Ramp Metals vs. Foran Mining |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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