Correlation Between United Breweries and Canadian National
Can any of the company-specific risk be diversified away by investing in both United Breweries and Canadian National 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 United Breweries and Canadian National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Co and Canadian National Railway, you can compare the effects of market volatilities on United Breweries and Canadian National 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 United Breweries with a short position of Canadian National. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Canadian National.
Diversification Opportunities for United Breweries and Canadian National
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Canadian is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Canadian National Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian National Railway and United Breweries 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 United Breweries Co are associated (or correlated) with Canadian National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian National Railway has no effect on the direction of United Breweries i.e., United Breweries and Canadian National go up and down completely randomly.
Pair Corralation between United Breweries and Canadian National
Assuming the 90 days trading horizon United Breweries Co is expected to generate 1.92 times more return on investment than Canadian National. However, United Breweries is 1.92 times more volatile than Canadian National Railway. It trades about 0.22 of its potential returns per unit of risk. Canadian National Railway is currently generating about 0.04 per unit of risk. If you would invest 1,070 in United Breweries Co on November 4, 2024 and sell it today you would earn a total of 80.00 from holding United Breweries Co or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. Canadian National Railway
Performance |
| Timeline |
| United Breweries |
| Canadian National Railway |
United Breweries and Canadian National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Canadian National
The main advantage of trading using opposite United Breweries and Canadian National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, Canadian National 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 Canadian National will offset losses from the drop in Canadian National's long position.| United Breweries vs. The Yokohama Rubber | United Breweries vs. Mitsubishi Materials | United Breweries vs. Heidelberg Materials AG | United Breweries vs. FIREWEED METALS P |
| Canadian National vs. CDL INVESTMENT | Canadian National vs. AOYAMA TRADING | Canadian National vs. Commercial Vehicle Group | Canadian National vs. Apollo Investment Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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