Correlation Between Homerun Resources and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Homerun Resources 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 Homerun Resources and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Homerun Resources and Canadian Utilities Limited, you can compare the effects of market volatilities on Homerun Resources 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 Homerun Resources with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homerun Resources and Canadian Utilities.
Diversification Opportunities for Homerun Resources and Canadian Utilities
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Homerun and Canadian is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Homerun Resources and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Homerun Resources 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 Homerun Resources 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 Homerun Resources i.e., Homerun Resources and Canadian Utilities go up and down completely randomly.
Pair Corralation between Homerun Resources and Canadian Utilities
Assuming the 90 days horizon Homerun Resources is expected to under-perform the Canadian Utilities. In addition to that, Homerun Resources is 7.29 times more volatile than Canadian Utilities Limited. It trades about -0.2 of its total potential returns per unit of risk. Canadian Utilities Limited is currently generating about -0.42 per unit of volatility. If you would invest 3,650 in Canadian Utilities Limited on October 11, 2024 and sell it today you would lose (222.00) from holding Canadian Utilities Limited or give up 6.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Homerun Resources vs. Canadian Utilities Limited
Performance |
| Timeline |
| Homerun Resources |
| Canadian Utilities |
Homerun Resources and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Homerun Resources and Canadian Utilities
The main advantage of trading using opposite Homerun Resources and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homerun Resources 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.| Homerun Resources vs. Canadian Utilities Limited | Homerun Resources vs. Economic Investment Trust | Homerun Resources vs. Canadian General Investments | Homerun Resources vs. High Liner Foods |
| Canadian Utilities vs. Fortis Inc | Canadian Utilities vs. Emera Inc | Canadian Utilities vs. Algonquin Power Utilities | Canadian Utilities vs. ATCO |
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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