Correlation Between Heidelberg Materials and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials and Canadian 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 Heidelberg Materials and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heidelberg Materials AG and Canadian Utilities Limited, you can compare the effects of market volatilities on Heidelberg Materials and Canadian 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 Heidelberg Materials with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and Canadian Utilities.
Diversification Opportunities for Heidelberg Materials and Canadian Utilities
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Heidelberg and Canadian is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Heidelberg Materials 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 Heidelberg Materials AG are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and Canadian Utilities go up and down completely randomly.
Pair Corralation between Heidelberg Materials and Canadian Utilities
Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 1.86 times more return on investment than Canadian Utilities. However, Heidelberg Materials is 1.86 times more volatile than Canadian Utilities Limited. It trades about 0.33 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about -0.23 per unit of risk. If you would invest 12,255 in Heidelberg Materials AG on November 5, 2024 and sell it today you would earn a total of 1,445 from holding Heidelberg Materials AG or generate 11.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heidelberg Materials AG vs. Canadian Utilities Limited
Performance |
| Timeline |
| Heidelberg Materials |
| Canadian Utilities |
Heidelberg Materials and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heidelberg Materials and Canadian Utilities
The main advantage of trading using opposite Heidelberg Materials and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials position performs unexpectedly, Canadian 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| Heidelberg Materials vs. GMO Internet | Heidelberg Materials vs. Rocket Internet SE | Heidelberg Materials vs. HEMISPHERE EGY | Heidelberg Materials vs. FAST RETAIL ADR |
| Canadian Utilities vs. Iberdrola SA | Canadian Utilities vs. Enel SpA | Canadian Utilities vs. Enel SpA | Canadian Utilities vs. National Grid PLC |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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