Correlation Between Canadian Utilities and Charter Communications
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Charter Communications 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 Charter Communications 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 Charter Communications, you can compare the effects of market volatilities on Canadian Utilities and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Charter Communications.
Diversification Opportunities for Canadian Utilities and Charter Communications
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canadian and Charter is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Charter Communications go up and down completely randomly.
Pair Corralation between Canadian Utilities and Charter Communications
Assuming the 90 days horizon Canadian Utilities Limited is expected to generate 0.53 times more return on investment than Charter Communications. However, Canadian Utilities Limited is 1.88 times less risky than Charter Communications. It trades about 0.01 of its potential returns per unit of risk. Charter Communications is currently generating about 0.0 per unit of risk. If you would invest 2,178 in Canadian Utilities Limited on October 18, 2024 and sell it today you would earn a total of 118.00 from holding Canadian Utilities Limited or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Charter Communications
Performance |
| Timeline |
| Canadian Utilities |
| Charter Communications |
Canadian Utilities and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Charter Communications
The main advantage of trading using opposite Canadian Utilities and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| Canadian Utilities vs. GLG LIFE TECH | Canadian Utilities vs. New Residential Investment | Canadian Utilities vs. FIRST SAVINGS FINL | Canadian Utilities vs. Sunny Optical Technology |
| Charter Communications vs. NORTHEAST UTILITIES | Charter Communications vs. Canadian Utilities Limited | Charter Communications vs. Nexstar Media Group | Charter Communications vs. Diamyd Medical AB |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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