Correlation Between Dividend Growth and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Dividend Growth and Canadian Utilities 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 Dividend Growth and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dividend Growth Split and Canadian Utilities Limited, you can compare the effects of market volatilities on Dividend Growth and Canadian Utilities 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 Dividend Growth with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dividend Growth and Canadian Utilities.
Diversification Opportunities for Dividend Growth and Canadian Utilities
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dividend and Canadian is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dividend Growth Split and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Dividend Growth 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 Dividend Growth Split are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Dividend Growth i.e., Dividend Growth and Canadian Utilities go up and down completely randomly.
Pair Corralation between Dividend Growth and Canadian Utilities
Assuming the 90 days trading horizon Dividend Growth Split is expected to generate 1.76 times more return on investment than Canadian Utilities. However, Dividend Growth is 1.76 times more volatile than Canadian Utilities Limited. It trades about 0.1 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.05 per unit of risk. If you would invest 424.00 in Dividend Growth Split on September 12, 2024 and sell it today you would earn a total of 304.00 from holding Dividend Growth Split or generate 71.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dividend Growth Split vs. Canadian Utilities Limited
Performance |
| Timeline |
| Dividend Growth Split |
| Canadian Utilities |
Dividend Growth and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dividend Growth and Canadian Utilities
The main advantage of trading using opposite Dividend Growth and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dividend Growth position performs unexpectedly, Canadian Utilities 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 Utilities will offset losses from the drop in Canadian Utilities' long position.| Dividend Growth vs. Life Banc Split | Dividend Growth vs. North American Financial | Dividend Growth vs. Financial 15 Split | Dividend Growth vs. Dividend 15 Split |
| Canadian Utilities vs. Fortis Inc | Canadian Utilities vs. Emera Inc | Canadian Utilities vs. Algonquin Power Utilities | Canadian Utilities vs. ATCO |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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