Correlation Between Canadian Utilities and Apple
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Canadian Utilities and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Apple.
Diversification Opportunities for Canadian Utilities and Apple
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canadian and Apple is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Apple go up and down completely randomly.
Pair Corralation between Canadian Utilities and Apple
Assuming the 90 days horizon Canadian Utilities Limited is expected to generate 0.93 times more return on investment than Apple. However, Canadian Utilities Limited is 1.08 times less risky than Apple. It trades about -0.07 of its potential returns per unit of risk. Apple Inc is currently generating about -0.24 per unit of risk. If you would invest 2,345 in Canadian Utilities Limited on October 16, 2024 and sell it today you would lose (26.00) from holding Canadian Utilities Limited or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Apple Inc
Performance |
| Timeline |
| Canadian Utilities |
| Apple Inc |
Canadian Utilities and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Apple
The main advantage of trading using opposite Canadian Utilities and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Canadian Utilities vs. APPLIED MATERIALS | Canadian Utilities vs. SOCKET MOBILE NEW | Canadian Utilities vs. Hyster Yale Materials Handling | Canadian Utilities vs. Goodyear Tire Rubber |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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