Correlation Between Canlan Ice and BMTC
Can any of the company-specific risk be diversified away by investing in both Canlan Ice and BMTC 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 Canlan Ice and BMTC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canlan Ice Sports and BMTC Group, you can compare the effects of market volatilities on Canlan Ice and BMTC 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 Canlan Ice with a short position of BMTC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and BMTC.
Diversification Opportunities for Canlan Ice and BMTC
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canlan and BMTC is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and BMTC Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMTC Group and Canlan Ice 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 Canlan Ice Sports are associated (or correlated) with BMTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMTC Group has no effect on the direction of Canlan Ice i.e., Canlan Ice and BMTC go up and down completely randomly.
Pair Corralation between Canlan Ice and BMTC
Assuming the 90 days trading horizon Canlan Ice is expected to generate 1.27 times less return on investment than BMTC. In addition to that, Canlan Ice is 1.17 times more volatile than BMTC Group. It trades about 0.02 of its total potential returns per unit of risk. BMTC Group is currently generating about 0.03 per unit of volatility. If you would invest 1,095 in BMTC Group on August 30, 2024 and sell it today you would earn a total of 224.00 from holding BMTC Group or generate 20.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canlan Ice Sports vs. BMTC Group
Performance |
| Timeline |
| Canlan Ice Sports |
| BMTC Group |
Canlan Ice and BMTC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and BMTC
The main advantage of trading using opposite Canlan Ice and BMTC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice position performs unexpectedly, BMTC 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 BMTC will offset losses from the drop in BMTC's long position.| Canlan Ice vs. Eros Resources Corp | Canlan Ice vs. Apple Inc CDR | Canlan Ice vs. European Residential Real | Canlan Ice vs. Canadian Utilities Ltd |
| BMTC vs. Eros Resources Corp | BMTC vs. Apple Inc CDR | BMTC vs. European Residential Real | BMTC vs. Canadian Utilities Ltd |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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