Correlation Between Canadian National and SIDETRADE
Can any of the company-specific risk be diversified away by investing in both Canadian National and SIDETRADE 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 National and SIDETRADE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian National Railway and SIDETRADE EO 1, you can compare the effects of market volatilities on Canadian National and SIDETRADE 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 National with a short position of SIDETRADE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian National and SIDETRADE.
Diversification Opportunities for Canadian National and SIDETRADE
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and SIDETRADE is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Canadian National Railway and SIDETRADE EO 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIDETRADE EO 1 and Canadian National 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 National Railway are associated (or correlated) with SIDETRADE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIDETRADE EO 1 has no effect on the direction of Canadian National i.e., Canadian National and SIDETRADE go up and down completely randomly.
Pair Corralation between Canadian National and SIDETRADE
Assuming the 90 days horizon Canadian National Railway is expected to under-perform the SIDETRADE. But the stock apears to be less risky and, when comparing its historical volatility, Canadian National Railway is 1.81 times less risky than SIDETRADE. The stock trades about -0.02 of its potential returns per unit of risk. The SIDETRADE EO 1 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 15,700 in SIDETRADE EO 1 on September 12, 2024 and sell it today you would earn a total of 6,000 from holding SIDETRADE EO 1 or generate 38.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian National Railway vs. SIDETRADE EO 1
Performance |
| Timeline |
| Canadian National Railway |
| SIDETRADE EO 1 |
Canadian National and SIDETRADE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian National and SIDETRADE
The main advantage of trading using opposite Canadian National and SIDETRADE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian National position performs unexpectedly, SIDETRADE 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 SIDETRADE will offset losses from the drop in SIDETRADE's long position.| Canadian National vs. SIDETRADE EO 1 | Canadian National vs. Zijin Mining Group | Canadian National vs. GALENA MINING LTD | Canadian National vs. GRIFFIN MINING LTD |
| SIDETRADE vs. Salesforce | SIDETRADE vs. Superior Plus Corp | SIDETRADE vs. SIVERS SEMICONDUCTORS AB | SIDETRADE vs. Norsk Hydro ASA |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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