Correlation Between Exchange Income and ATCO
Can any of the company-specific risk be diversified away by investing in both Exchange Income and ATCO 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 Exchange Income and ATCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Income and ATCO, you can compare the effects of market volatilities on Exchange Income and ATCO 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 Exchange Income with a short position of ATCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Income and ATCO.
Diversification Opportunities for Exchange Income and ATCO
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Exchange and ATCO is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Income and ATCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATCO and Exchange Income 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 Exchange Income are associated (or correlated) with ATCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATCO has no effect on the direction of Exchange Income i.e., Exchange Income and ATCO go up and down completely randomly.
Pair Corralation between Exchange Income and ATCO
Assuming the 90 days trading horizon Exchange Income is expected to generate 1.31 times less return on investment than ATCO. In addition to that, Exchange Income is 1.2 times more volatile than ATCO. It trades about 0.04 of its total potential returns per unit of risk. ATCO is currently generating about 0.07 per unit of volatility. If you would invest 3,880 in ATCO on August 31, 2024 and sell it today you would earn a total of 1,001 from holding ATCO or generate 25.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Exchange Income vs. ATCO
Performance |
| Timeline |
| Exchange Income |
| ATCO |
Exchange Income and ATCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exchange Income and ATCO
The main advantage of trading using opposite Exchange Income and ATCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Income position performs unexpectedly, ATCO 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 ATCO will offset losses from the drop in ATCO's long position.| Exchange Income vs. Capital Power | Exchange Income vs. Keyera Corp | Exchange Income vs. Parkland Fuel | Exchange Income vs. TFI International |
| ATCO vs. Caldwell Partners International | ATCO vs. Chesswood Group Limited | ATCO vs. Forstrong Global Income | ATCO vs. BMO Aggregate Bond |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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