Correlation Between Eco Atlantic and Canadian General
Can any of the company-specific risk be diversified away by investing in both Eco Atlantic and Canadian General 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 Eco Atlantic and Canadian General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eco Atlantic Oil and Canadian General Investments, you can compare the effects of market volatilities on Eco Atlantic and Canadian General 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 Eco Atlantic with a short position of Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco Atlantic and Canadian General.
Diversification Opportunities for Eco Atlantic and Canadian General
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eco and Canadian is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Eco Atlantic Oil and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv and Eco Atlantic 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 Eco Atlantic Oil are associated (or correlated) with Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Eco Atlantic i.e., Eco Atlantic and Canadian General go up and down completely randomly.
Pair Corralation between Eco Atlantic and Canadian General
Assuming the 90 days horizon Eco Atlantic Oil is expected to generate 4.14 times more return on investment than Canadian General. However, Eco Atlantic is 4.14 times more volatile than Canadian General Investments. It trades about 0.03 of its potential returns per unit of risk. Canadian General Investments is currently generating about 0.08 per unit of risk. If you would invest 16.00 in Eco Atlantic Oil on September 2, 2024 and sell it today you would earn a total of 2.00 from holding Eco Atlantic Oil or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eco Atlantic Oil vs. Canadian General Investments
Performance |
| Timeline |
| Eco Atlantic Oil |
| Canadian General Inv |
Eco Atlantic and Canadian General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eco Atlantic and Canadian General
The main advantage of trading using opposite Eco Atlantic and Canadian General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco Atlantic position performs unexpectedly, Canadian General 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 General will offset losses from the drop in Canadian General's long position.The idea behind Eco Atlantic Oil and Canadian General Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Canadian General vs. Uniteds Limited | Canadian General vs. Economic Investment Trust | Canadian General vs. abrdn Asia Pacific | Canadian General vs. Clairvest Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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