Correlation Between Eros Resources and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Eros Resources 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 Eros Resources and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eros Resources Corp and Canadian Utilities Ltd, you can compare the effects of market volatilities on Eros Resources 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 Eros Resources with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eros Resources and Canadian Utilities.
Diversification Opportunities for Eros Resources and Canadian Utilities
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eros and Canadian is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Eros Resources Corp and Canadian Utilities Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Eros Resources 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 Eros Resources Corp 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 Eros Resources i.e., Eros Resources and Canadian Utilities go up and down completely randomly.
Pair Corralation between Eros Resources and Canadian Utilities
Assuming the 90 days horizon Eros Resources Corp is expected to under-perform the Canadian Utilities. In addition to that, Eros Resources is 5.13 times more volatile than Canadian Utilities Ltd. It trades about -0.12 of its total potential returns per unit of risk. Canadian Utilities Ltd is currently generating about -0.14 per unit of volatility. If you would invest 2,247 in Canadian Utilities Ltd on August 29, 2024 and sell it today you would lose (87.00) from holding Canadian Utilities Ltd or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eros Resources Corp vs. Canadian Utilities Ltd
Performance |
| Timeline |
| Eros Resources Corp |
| Canadian Utilities |
Eros Resources and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eros Resources and Canadian Utilities
The main advantage of trading using opposite Eros Resources and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eros Resources 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.| Eros Resources vs. First Majestic Silver | Eros Resources vs. Ivanhoe Energy | Eros Resources vs. Orezone Gold Corp | Eros Resources vs. Faraday Copper Corp |
| Canadian Utilities vs. Forstrong Global Income | Canadian Utilities vs. Terreno Resources Corp | Canadian Utilities vs. iShares Canadian HYBrid | Canadian Utilities vs. Brompton European Dividend |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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