Correlation Between Economic Investment and Transalta
Can any of the company-specific risk be diversified away by investing in both Economic Investment and Transalta 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 Economic Investment and Transalta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Economic Investment Trust and Transalta A Cum, you can compare the effects of market volatilities on Economic Investment and Transalta 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 Economic Investment with a short position of Transalta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Economic Investment and Transalta.
Diversification Opportunities for Economic Investment and Transalta
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Economic and Transalta is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Economic Investment Trust and Transalta A Cum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transalta A Cum and Economic Investment 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 Economic Investment Trust are associated (or correlated) with Transalta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transalta A Cum has no effect on the direction of Economic Investment i.e., Economic Investment and Transalta go up and down completely randomly.
Pair Corralation between Economic Investment and Transalta
Assuming the 90 days trading horizon Economic Investment is expected to generate 1.17 times less return on investment than Transalta. But when comparing it to its historical volatility, Economic Investment Trust is 1.07 times less risky than Transalta. It trades about 0.11 of its potential returns per unit of risk. Transalta A Cum is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,123 in Transalta A Cum on September 14, 2024 and sell it today you would earn a total of 403.00 from holding Transalta A Cum or generate 35.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Economic Investment Trust vs. Transalta A Cum
Performance |
| Timeline |
| Economic Investment Trust |
| Transalta A Cum |
Economic Investment and Transalta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Economic Investment and Transalta
The main advantage of trading using opposite Economic Investment and Transalta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Economic Investment position performs unexpectedly, Transalta 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 Transalta will offset losses from the drop in Transalta's long position.| Economic Investment vs. Uniteds Limited | Economic Investment vs. E L Financial Corp | Economic Investment vs. Canadian General Investments | Economic Investment vs. Clairvest Group |
| Transalta vs. NeXGold Mining Corp | Transalta vs. Aya Gold Silver | Transalta vs. Metalero Mining Corp | Transalta vs. Sangoma Technologies Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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