Correlation Between CP ALL and Niagara Mohawk
Can any of the company-specific risk be diversified away by investing in both CP ALL and Niagara Mohawk 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 CP ALL and Niagara Mohawk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CP ALL Public and Niagara Mohawk Power, you can compare the effects of market volatilities on CP ALL and Niagara Mohawk 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 CP ALL with a short position of Niagara Mohawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and Niagara Mohawk.
Diversification Opportunities for CP ALL and Niagara Mohawk
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVPBF and Niagara is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and Niagara Mohawk Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niagara Mohawk Power and CP ALL 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 CP ALL Public are associated (or correlated) with Niagara Mohawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niagara Mohawk Power has no effect on the direction of CP ALL i.e., CP ALL and Niagara Mohawk go up and down completely randomly.
Pair Corralation between CP ALL and Niagara Mohawk
Assuming the 90 days horizon CP ALL Public is expected to generate 3.68 times more return on investment than Niagara Mohawk. However, CP ALL is 3.68 times more volatile than Niagara Mohawk Power. It trades about 0.06 of its potential returns per unit of risk. Niagara Mohawk Power is currently generating about 0.08 per unit of risk. If you would invest 169.00 in CP ALL Public on September 1, 2024 and sell it today you would earn a total of 37.00 from holding CP ALL Public or generate 21.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.83% |
| Values | Daily Returns |
CP ALL Public vs. Niagara Mohawk Power
Performance |
| Timeline |
| CP ALL Public |
| Niagara Mohawk Power |
CP ALL and Niagara Mohawk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CP ALL and Niagara Mohawk
The main advantage of trading using opposite CP ALL and Niagara Mohawk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CP ALL position performs unexpectedly, Niagara Mohawk 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 Niagara Mohawk will offset losses from the drop in Niagara Mohawk's long position.The idea behind CP ALL Public and Niagara Mohawk Power pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Niagara Mohawk vs. Legacy Education | Niagara Mohawk vs. Apple Inc | Niagara Mohawk vs. NVIDIA | Niagara Mohawk vs. Microsoft |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |