Correlation Between Canadian Utilities and WELL Health
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and WELL Health 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 WELL Health 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 WELL Health Technologies, you can compare the effects of market volatilities on Canadian Utilities and WELL Health 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 WELL Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and WELL Health.
Diversification Opportunities for Canadian Utilities and WELL Health
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canadian and WELL is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and WELL Health Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELL Health Technologies 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 WELL Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WELL Health Technologies has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and WELL Health go up and down completely randomly.
Pair Corralation between Canadian Utilities and WELL Health
Assuming the 90 days horizon Canadian Utilities is expected to generate 12.7 times less return on investment than WELL Health. But when comparing it to its historical volatility, Canadian Utilities Limited is 2.96 times less risky than WELL Health. It trades about 0.02 of its potential returns per unit of risk. WELL Health Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 283.00 in WELL Health Technologies on September 3, 2024 and sell it today you would earn a total of 321.00 from holding WELL Health Technologies or generate 113.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. WELL Health Technologies
Performance |
| Timeline |
| Canadian Utilities |
| WELL Health Technologies |
Canadian Utilities and WELL Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and WELL Health
The main advantage of trading using opposite Canadian Utilities and WELL Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, WELL Health 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 WELL Health will offset losses from the drop in WELL Health'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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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