Correlation Between Canadian Utilities and Northstar Clean
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Northstar Clean 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 Northstar Clean 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 Northstar Clean Technologies, you can compare the effects of market volatilities on Canadian Utilities and Northstar Clean 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 Northstar Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Northstar Clean.
Diversification Opportunities for Canadian Utilities and Northstar Clean
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and Northstar is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech 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 Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Northstar Clean go up and down completely randomly.
Pair Corralation between Canadian Utilities and Northstar Clean
Assuming the 90 days horizon Canadian Utilities Limited is expected to generate 0.43 times more return on investment than Northstar Clean. However, Canadian Utilities Limited is 2.34 times less risky than Northstar Clean. It trades about -0.13 of its potential returns per unit of risk. Northstar Clean Technologies is currently generating about -0.5 per unit of risk. If you would invest 3,478 in Canadian Utilities Limited on November 3, 2024 and sell it today you would lose (83.00) from holding Canadian Utilities Limited or give up 2.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Northstar Clean Technologies
Performance |
| Timeline |
| Canadian Utilities |
| Northstar Clean Tech |
Canadian Utilities and Northstar Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Northstar Clean
The main advantage of trading using opposite Canadian Utilities and Northstar Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Northstar Clean 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 Northstar Clean will offset losses from the drop in Northstar Clean's long position.| Canadian Utilities vs. Fortis Inc | Canadian Utilities vs. Emera Inc | Canadian Utilities vs. Algonquin Power Utilities | Canadian Utilities vs. ATCO |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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