Correlation Between Element Fleet and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Element Fleet 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 Element Fleet and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Fleet Management and Canadian Utilities Ltd, you can compare the effects of market volatilities on Element Fleet 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 Element Fleet with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and Canadian Utilities.
Diversification Opportunities for Element Fleet and Canadian Utilities
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Element and Canadian is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and Canadian Utilities Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Element Fleet 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 Element Fleet Management 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 Element Fleet i.e., Element Fleet and Canadian Utilities go up and down completely randomly.
Pair Corralation between Element Fleet and Canadian Utilities
Assuming the 90 days trading horizon Element Fleet Management is expected to generate 1.39 times more return on investment than Canadian Utilities. However, Element Fleet is 1.39 times more volatile than Canadian Utilities Ltd. It trades about 0.1 of its potential returns per unit of risk. Canadian Utilities Ltd is currently generating about 0.07 per unit of risk. If you would invest 2,172 in Element Fleet Management on September 3, 2024 and sell it today you would earn a total of 784.00 from holding Element Fleet Management or generate 36.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Fleet Management vs. Canadian Utilities Ltd
Performance |
| Timeline |
| Element Fleet Management |
| Canadian Utilities |
Element Fleet and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Fleet and Canadian Utilities
The main advantage of trading using opposite Element Fleet and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Fleet 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.| Element Fleet vs. ECN Capital Corp | Element Fleet vs. Martinrea International | Element Fleet vs. CCL Industries | Element Fleet vs. FirstService Corp |
| Canadian Utilities vs. 2028 Investment Grade | Canadian Utilities vs. Globex Mining Enterprises | Canadian Utilities vs. CNJ Capital Investments | Canadian Utilities vs. Atrium Mortgage Investment |
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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