Correlation Between Canadian Utilities and CARSALESCOM
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM, you can compare the effects of market volatilities on Canadian Utilities and CARSALESCOM 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 CARSALESCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and CARSALESCOM.
Diversification Opportunities for Canadian Utilities and CARSALESCOM
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canadian and CARSALESCOM is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and CARSALESCOM go up and down completely randomly.
Pair Corralation between Canadian Utilities and CARSALESCOM
Assuming the 90 days horizon Canadian Utilities Limited is expected to under-perform the CARSALESCOM. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Utilities Limited is 2.13 times less risky than CARSALESCOM. The stock trades about -0.08 of its potential returns per unit of risk. The CARSALESCOM is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,280 in CARSALESCOM on October 17, 2024 and sell it today you would earn a total of 0.00 from holding CARSALESCOM or generate 0.0% 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. CARSALESCOM
Performance |
| Timeline |
| Canadian Utilities |
| CARSALESCOM |
Canadian Utilities and CARSALESCOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and CARSALESCOM
The main advantage of trading using opposite Canadian Utilities and CARSALESCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, CARSALESCOM 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 CARSALESCOM will offset losses from the drop in CARSALESCOM's long position.| Canadian Utilities vs. Scottish Mortgage Investment | Canadian Utilities vs. SLR Investment Corp | Canadian Utilities vs. American Eagle Outfitters | Canadian Utilities vs. HK Electric Investments |
| CARSALESCOM vs. Darden Restaurants | CARSALESCOM vs. CLEAN ENERGY FUELS | CARSALESCOM vs. UNITED RENTALS | CARSALESCOM vs. Canadian Utilities Limited |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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