Correlation Between GreenPower and Canadian Pacific
Can any of the company-specific risk be diversified away by investing in both GreenPower and Canadian Pacific 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 GreenPower and Canadian Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenPower Motor and Canadian Pacific Railway, you can compare the effects of market volatilities on GreenPower and Canadian Pacific 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 GreenPower with a short position of Canadian Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenPower and Canadian Pacific.
Diversification Opportunities for GreenPower and Canadian Pacific
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GreenPower and Canadian is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding GreenPower Motor and Canadian Pacific Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Pacific Railway and GreenPower 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 GreenPower Motor are associated (or correlated) with Canadian Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Pacific Railway has no effect on the direction of GreenPower i.e., GreenPower and Canadian Pacific go up and down completely randomly.
Pair Corralation between GreenPower and Canadian Pacific
Assuming the 90 days horizon GreenPower Motor is expected to under-perform the Canadian Pacific. In addition to that, GreenPower is 4.65 times more volatile than Canadian Pacific Railway. It trades about 0.0 of its total potential returns per unit of risk. Canadian Pacific Railway is currently generating about 0.01 per unit of volatility. If you would invest 10,713 in Canadian Pacific Railway on September 3, 2024 and sell it today you would lose (2.00) from holding Canadian Pacific Railway or give up 0.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GreenPower Motor vs. Canadian Pacific Railway
Performance |
| Timeline |
| GreenPower Motor |
| Canadian Pacific Railway |
GreenPower and Canadian Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GreenPower and Canadian Pacific
The main advantage of trading using opposite GreenPower and Canadian Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenPower position performs unexpectedly, Canadian Pacific 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 Pacific will offset losses from the drop in Canadian Pacific's long position.| GreenPower vs. NFI Group | GreenPower vs. Docebo Inc | GreenPower vs. WELL Health Technologies | GreenPower vs. Dye Durham |
| Canadian Pacific vs. Canadian National Railway | Canadian Pacific vs. TC Energy Corp | Canadian Pacific vs. Fortis Inc | Canadian Pacific vs. Loblaw Companies Limited |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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