Correlation Between Eastwood Bio and Canadian Western
Can any of the company-specific risk be diversified away by investing in both Eastwood Bio and Canadian Western 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 Eastwood Bio and Canadian Western into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastwood Bio Medical Canada and Canadian Western Bank, you can compare the effects of market volatilities on Eastwood Bio and Canadian Western 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 Eastwood Bio with a short position of Canadian Western. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastwood Bio and Canadian Western.
Diversification Opportunities for Eastwood Bio and Canadian Western
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eastwood and Canadian is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eastwood Bio Medical Canada and Canadian Western Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Western Bank and Eastwood Bio 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 Eastwood Bio Medical Canada are associated (or correlated) with Canadian Western. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Western Bank has no effect on the direction of Eastwood Bio i.e., Eastwood Bio and Canadian Western go up and down completely randomly.
Pair Corralation between Eastwood Bio and Canadian Western
Assuming the 90 days horizon Eastwood Bio Medical Canada is expected to generate 4.11 times more return on investment than Canadian Western. However, Eastwood Bio is 4.11 times more volatile than Canadian Western Bank. It trades about 0.05 of its potential returns per unit of risk. Canadian Western Bank is currently generating about 0.07 per unit of risk. If you would invest 90.00 in Eastwood Bio Medical Canada on November 2, 2024 and sell it today you would lose (50.00) from holding Eastwood Bio Medical Canada or give up 55.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Eastwood Bio Medical Canada vs. Canadian Western Bank
Performance |
| Timeline |
| Eastwood Bio Medical |
| Canadian Western Bank |
Eastwood Bio and Canadian Western Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastwood Bio and Canadian Western
The main advantage of trading using opposite Eastwood Bio and Canadian Western positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastwood Bio position performs unexpectedly, Canadian Western 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 Western will offset losses from the drop in Canadian Western's long position.| Eastwood Bio vs. Covalon Technologies | Eastwood Bio vs. Sirona Biochem Corp | Eastwood Bio vs. Medicure | Eastwood Bio vs. Arch Biopartners |
| Canadian Western vs. Laurentian Bank | Canadian Western vs. National Bank of | Canadian Western vs. Great West Lifeco | Canadian Western vs. CI Financial 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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