Correlation Between Canadian Utilities and UMC Electronics
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and UMC Electronics 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 UMC Electronics 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 UMC Electronics Co, you can compare the effects of market volatilities on Canadian Utilities and UMC Electronics 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 UMC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and UMC Electronics.
Diversification Opportunities for Canadian Utilities and UMC Electronics
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and UMC is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and UMC Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMC Electronics 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 UMC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMC Electronics has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and UMC Electronics go up and down completely randomly.
Pair Corralation between Canadian Utilities and UMC Electronics
Assuming the 90 days horizon Canadian Utilities Limited is expected to generate 0.48 times more return on investment than UMC Electronics. However, Canadian Utilities Limited is 2.1 times less risky than UMC Electronics. It trades about 0.02 of its potential returns per unit of risk. UMC Electronics Co is currently generating about -0.03 per unit of risk. If you would invest 2,178 in Canadian Utilities Limited on August 30, 2024 and sell it today you would earn a total of 265.00 from holding Canadian Utilities Limited or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. UMC Electronics Co
Performance |
| Timeline |
| Canadian Utilities |
| UMC Electronics |
Canadian Utilities and UMC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and UMC Electronics
The main advantage of trading using opposite Canadian Utilities and UMC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, UMC Electronics 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 UMC Electronics will offset losses from the drop in UMC Electronics' long position.| Canadian Utilities vs. National Grid PLC | Canadian Utilities vs. Superior Plus Corp | Canadian Utilities vs. SIVERS SEMICONDUCTORS AB | Canadian Utilities vs. Identiv |
| UMC Electronics vs. Jacquet Metal Service | UMC Electronics vs. ADRIATIC METALS LS 013355 | UMC Electronics vs. Zijin Mining Group | UMC Electronics vs. PARKEN Sport Entertainment |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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