Correlation Between Fortis and Canadian National
Can any of the company-specific risk be diversified away by investing in both Fortis and Canadian National 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 Fortis and Canadian National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortis Inc and Canadian National Railway, you can compare the effects of market volatilities on Fortis and Canadian National 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 Fortis with a short position of Canadian National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortis and Canadian National.
Diversification Opportunities for Fortis and Canadian National
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fortis and Canadian is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Fortis Inc and Canadian National Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian National Railway and Fortis 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 Fortis Inc are associated (or correlated) with Canadian National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian National Railway has no effect on the direction of Fortis i.e., Fortis and Canadian National go up and down completely randomly.
Pair Corralation between Fortis and Canadian National
Assuming the 90 days trading horizon Fortis Inc is expected to generate 0.89 times more return on investment than Canadian National. However, Fortis Inc is 1.12 times less risky than Canadian National. It trades about 0.05 of its potential returns per unit of risk. Canadian National Railway is currently generating about 0.0 per unit of risk. If you would invest 5,015 in Fortis Inc on August 28, 2024 and sell it today you would earn a total of 1,275 from holding Fortis Inc or generate 25.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortis Inc vs. Canadian National Railway
Performance |
| Timeline |
| Fortis Inc |
| Canadian National Railway |
Fortis and Canadian National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortis and Canadian National
The main advantage of trading using opposite Fortis and Canadian National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortis position performs unexpectedly, Canadian National 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 National will offset losses from the drop in Canadian National's long position.The idea behind Fortis Inc and Canadian National Railway 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 National vs. Canadian Pacific Railway | Canadian National vs. Fortis Inc | Canadian National vs. BCE Inc | Canadian National vs. Telus 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |