Correlation Between Medical Facilities and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Medical Facilities 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 Medical Facilities and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Facilities and Canadian Utilities Limited, you can compare the effects of market volatilities on Medical Facilities 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 Medical Facilities with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Facilities and Canadian Utilities.
Diversification Opportunities for Medical Facilities and Canadian Utilities
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Medical and Canadian is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Medical Facilities and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Medical Facilities 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 Medical Facilities 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 Medical Facilities i.e., Medical Facilities and Canadian Utilities go up and down completely randomly.
Pair Corralation between Medical Facilities and Canadian Utilities
Assuming the 90 days horizon Medical Facilities is expected to generate 2.06 times more return on investment than Canadian Utilities. However, Medical Facilities is 2.06 times more volatile than Canadian Utilities Limited. It trades about 0.11 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.12 per unit of risk. If you would invest 1,363 in Medical Facilities on October 22, 2024 and sell it today you would earn a total of 308.00 from holding Medical Facilities or generate 22.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Facilities vs. Canadian Utilities Limited
Performance |
| Timeline |
| Medical Facilities |
| Canadian Utilities |
Medical Facilities and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Facilities and Canadian Utilities
The main advantage of trading using opposite Medical Facilities and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Facilities 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.| Medical Facilities vs. Extendicare | Medical Facilities vs. Sienna Senior Living | Medical Facilities vs. Rogers Sugar | Medical Facilities vs. Chemtrade Logistics Income |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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