Correlation Between North American and Scandium Canada
Can any of the company-specific risk be diversified away by investing in both North American and Scandium Canada 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 North American and Scandium Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Financial and Scandium Canada, you can compare the effects of market volatilities on North American and Scandium Canada 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 North American with a short position of Scandium Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Scandium Canada.
Diversification Opportunities for North American and Scandium Canada
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between North and Scandium is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and Scandium Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandium Canada and North American 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 North American Financial are associated (or correlated) with Scandium Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandium Canada has no effect on the direction of North American i.e., North American and Scandium Canada go up and down completely randomly.
Pair Corralation between North American and Scandium Canada
Assuming the 90 days trading horizon North American is expected to generate 15.88 times less return on investment than Scandium Canada. But when comparing it to its historical volatility, North American Financial is 4.67 times less risky than Scandium Canada. It trades about 0.06 of its potential returns per unit of risk. Scandium Canada is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1.50 in Scandium Canada on November 8, 2024 and sell it today you would earn a total of 0.50 from holding Scandium Canada or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Financial vs. Scandium Canada
Performance |
| Timeline |
| North American Financial |
| Scandium Canada |
North American and Scandium Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Scandium Canada
The main advantage of trading using opposite North American and Scandium Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Scandium Canada 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 Scandium Canada will offset losses from the drop in Scandium Canada's long position.| North American vs. Dividend Growth Split | North American vs. Dividend 15 Split | North American vs. Financial 15 Split | North American vs. Dividend 15 Split |
| Scandium Canada vs. Bird Construction | Scandium Canada vs. Financial 15 Split | Scandium Canada vs. Definity Financial Corp | Scandium Canada vs. Olympia Financial 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |