Correlation Between Canadian Utilities and Linde PLC
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Linde PLC 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 Linde PLC 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 Linde PLC, you can compare the effects of market volatilities on Canadian Utilities and Linde PLC 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 Linde PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Linde PLC.
Diversification Opportunities for Canadian Utilities and Linde PLC
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Canadian and Linde is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Linde PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde PLC 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 Linde PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linde PLC has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Linde PLC go up and down completely randomly.
Pair Corralation between Canadian Utilities and Linde PLC
Assuming the 90 days horizon Canadian Utilities Limited is expected to under-perform the Linde PLC. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Utilities Limited is 1.09 times less risky than Linde PLC. The stock trades about -0.23 of its potential returns per unit of risk. The Linde PLC is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 39,980 in Linde PLC on November 7, 2024 and sell it today you would earn a total of 3,900 from holding Linde PLC or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Linde PLC
Performance |
| Timeline |
| Canadian Utilities |
| Linde PLC |
Canadian Utilities and Linde PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Linde PLC
The main advantage of trading using opposite Canadian Utilities and Linde PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Linde PLC 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 Linde PLC will offset losses from the drop in Linde PLC's long position.| Canadian Utilities vs. HYATT HOTELS A | Canadian Utilities vs. Sunstone Hotel Investors | Canadian Utilities vs. Regal Hotels International | Canadian Utilities vs. NH HOTEL GROUP |
| Linde PLC vs. Delta Electronics Public | Linde PLC vs. Electronic Arts | Linde PLC vs. COMPUTERSHARE | Linde PLC vs. Rocket Internet SE |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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