Correlation Between Canadian Utilities and REINET INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and REINET INVESTMENTS 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 REINET INVESTMENTS 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 REINET INVESTMENTS SCA, you can compare the effects of market volatilities on Canadian Utilities and REINET INVESTMENTS 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 REINET INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and REINET INVESTMENTS.
Diversification Opportunities for Canadian Utilities and REINET INVESTMENTS
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canadian and REINET is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and REINET INVESTMENTS SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REINET INVESTMENTS SCA 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 REINET INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REINET INVESTMENTS SCA has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and REINET INVESTMENTS go up and down completely randomly.
Pair Corralation between Canadian Utilities and REINET INVESTMENTS
Assuming the 90 days horizon Canadian Utilities is expected to generate 5.98 times less return on investment than REINET INVESTMENTS. But when comparing it to its historical volatility, Canadian Utilities Limited is 2.45 times less risky than REINET INVESTMENTS. It trades about 0.02 of its potential returns per unit of risk. REINET INVESTMENTS SCA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,707 in REINET INVESTMENTS SCA on September 3, 2024 and sell it today you would earn a total of 713.00 from holding REINET INVESTMENTS SCA or generate 41.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. REINET INVESTMENTS SCA
Performance |
| Timeline |
| Canadian Utilities |
| REINET INVESTMENTS SCA |
Canadian Utilities and REINET INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and REINET INVESTMENTS
The main advantage of trading using opposite Canadian Utilities and REINET INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, REINET INVESTMENTS 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 REINET INVESTMENTS will offset losses from the drop in REINET INVESTMENTS's long position.| Canadian Utilities vs. MAVEN WIRELESS SWEDEN | Canadian Utilities vs. Citic Telecom International | Canadian Utilities vs. Tower One Wireless | Canadian Utilities vs. Chunghwa Telecom Co |
| REINET INVESTMENTS vs. NIPPON STEEL SPADR | REINET INVESTMENTS vs. Broadcom | REINET INVESTMENTS vs. CECO ENVIRONMENTAL | REINET INVESTMENTS vs. TEXAS ROADHOUSE |
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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