Correlation Between Canoe EIT and North American
Can any of the company-specific risk be diversified away by investing in both Canoe EIT and North American 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 Canoe EIT and North American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canoe EIT Income and North American Financial, you can compare the effects of market volatilities on Canoe EIT and North American 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 Canoe EIT with a short position of North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoe EIT and North American.
Diversification Opportunities for Canoe EIT and North American
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Canoe and North is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Canoe EIT Income and North American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Financial and Canoe EIT 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 Canoe EIT Income are associated (or correlated) with North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Financial has no effect on the direction of Canoe EIT i.e., Canoe EIT and North American go up and down completely randomly.
Pair Corralation between Canoe EIT and North American
Assuming the 90 days trading horizon Canoe EIT is expected to generate 2.06 times less return on investment than North American. But when comparing it to its historical volatility, Canoe EIT Income is 3.19 times less risky than North American. It trades about 0.26 of its potential returns per unit of risk. North American Financial is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 541.00 in North American Financial on August 31, 2024 and sell it today you would earn a total of 211.00 from holding North American Financial or generate 39.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canoe EIT Income vs. North American Financial
Performance |
| Timeline |
| Canoe EIT Income |
| North American Financial |
Canoe EIT and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canoe EIT and North American
The main advantage of trading using opposite Canoe EIT and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canoe EIT position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.| Canoe EIT vs. Dividend 15 Split | Canoe EIT vs. E Split Corp | Canoe EIT vs. Global Dividend Growth | Canoe EIT vs. Dividend Growth Split |
| North American vs. iShares Canadian HYBrid | North American vs. Brompton European Dividend | North American vs. Solar Alliance Energy | North American vs. PHN Multi Style All Cap |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |