Correlation Between Fortis and Caribbean Utilities
Can any of the company-specific risk be diversified away by investing in both Fortis and Caribbean 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 Fortis and Caribbean Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortis Inc and Caribbean Utilities, you can compare the effects of market volatilities on Fortis and Caribbean 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 Fortis with a short position of Caribbean Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortis and Caribbean Utilities.
Diversification Opportunities for Fortis and Caribbean Utilities
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fortis and Caribbean is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Fortis Inc and Caribbean Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribbean Utilities 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 Caribbean Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribbean Utilities has no effect on the direction of Fortis i.e., Fortis and Caribbean Utilities go up and down completely randomly.
Pair Corralation between Fortis and Caribbean Utilities
Assuming the 90 days trading horizon Fortis Inc is expected to generate 0.87 times more return on investment than Caribbean Utilities. However, Fortis Inc is 1.15 times less risky than Caribbean Utilities. It trades about 0.22 of its potential returns per unit of risk. Caribbean Utilities is currently generating about -0.01 per unit of risk. If you would invest 6,037 in Fortis Inc on August 28, 2024 and sell it today you would earn a total of 253.00 from holding Fortis Inc or generate 4.19% 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. Caribbean Utilities
Performance |
| Timeline |
| Fortis Inc |
| Caribbean Utilities |
Fortis and Caribbean Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortis and Caribbean Utilities
The main advantage of trading using opposite Fortis and Caribbean Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortis position performs unexpectedly, Caribbean 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 Caribbean Utilities will offset losses from the drop in Caribbean Utilities' long position.The idea behind Fortis Inc and Caribbean Utilities 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.| Caribbean Utilities vs. Maxim Power Corp | Caribbean Utilities vs. ATCO | Caribbean Utilities vs. Capstone Infrastructure Corp | Caribbean Utilities vs. Richards Packaging Income |
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 Stocks Directory module to find actively traded stocks across global markets.
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