Correlation Between US Financial and Chemtrade Logistics
Can any of the company-specific risk be diversified away by investing in both US Financial and Chemtrade Logistics 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 US Financial and Chemtrade Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Financial 15 and Chemtrade Logistics Income, you can compare the effects of market volatilities on US Financial and Chemtrade Logistics 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 US Financial with a short position of Chemtrade Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Chemtrade Logistics.
Diversification Opportunities for US Financial and Chemtrade Logistics
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FTU-PB and Chemtrade is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and Chemtrade Logistics Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemtrade Logistics and US Financial 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 US Financial 15 are associated (or correlated) with Chemtrade Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemtrade Logistics has no effect on the direction of US Financial i.e., US Financial and Chemtrade Logistics go up and down completely randomly.
Pair Corralation between US Financial and Chemtrade Logistics
Assuming the 90 days trading horizon US Financial 15 is expected to generate 1.26 times more return on investment than Chemtrade Logistics. However, US Financial is 1.26 times more volatile than Chemtrade Logistics Income. It trades about 0.12 of its potential returns per unit of risk. Chemtrade Logistics Income is currently generating about 0.13 per unit of risk. If you would invest 504.00 in US Financial 15 on September 2, 2024 and sell it today you would earn a total of 268.00 from holding US Financial 15 or generate 53.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Financial 15 vs. Chemtrade Logistics Income
Performance |
| Timeline |
| US Financial 15 |
| Chemtrade Logistics |
US Financial and Chemtrade Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Financial and Chemtrade Logistics
The main advantage of trading using opposite US Financial and Chemtrade Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Financial position performs unexpectedly, Chemtrade Logistics 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 Chemtrade Logistics will offset losses from the drop in Chemtrade Logistics' long position.| US Financial vs. Fairfax Financial Holdings | US Financial vs. iShares Canadian HYBrid | US Financial vs. Brompton European Dividend | US Financial vs. Solar Alliance Energy |
| Chemtrade Logistics vs. Extendicare | Chemtrade Logistics vs. NorthWest Healthcare Properties | Chemtrade Logistics vs. Exchange Income | Chemtrade Logistics vs. Freehold Royalties |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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