Correlation Between Canlan Ice and Laurentian Bank
Can any of the company-specific risk be diversified away by investing in both Canlan Ice and Laurentian Bank 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 Laurentian Bank 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 Laurentian Bank, you can compare the effects of market volatilities on Canlan Ice and Laurentian Bank 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 Laurentian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Laurentian Bank.
Diversification Opportunities for Canlan Ice and Laurentian Bank
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canlan and Laurentian is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Laurentian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank 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 Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of Canlan Ice i.e., Canlan Ice and Laurentian Bank go up and down completely randomly.
Pair Corralation between Canlan Ice and Laurentian Bank
Assuming the 90 days trading horizon Canlan Ice Sports is expected to under-perform the Laurentian Bank. But the stock apears to be less risky and, when comparing its historical volatility, Canlan Ice Sports is 1.11 times less risky than Laurentian Bank. The stock trades about -0.08 of its potential returns per unit of risk. The Laurentian Bank is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,871 in Laurentian Bank on October 26, 2024 and sell it today you would earn a total of 36.00 from holding Laurentian Bank or generate 1.25% 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. Laurentian Bank
Performance |
| Timeline |
| Canlan Ice Sports |
| Laurentian Bank |
Canlan Ice and Laurentian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and Laurentian Bank
The main advantage of trading using opposite Canlan Ice and Laurentian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice position performs unexpectedly, Laurentian Bank 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 Laurentian Bank will offset losses from the drop in Laurentian Bank's long position.| Canlan Ice vs. BMTC Group | Canlan Ice vs. Caldwell Partners International | Canlan Ice vs. TWC Enterprises | Canlan Ice vs. Madison Pacific Properties |
| Laurentian Bank vs. Canadian Western Bank | Laurentian Bank vs. National Bank of | Laurentian Bank vs. Canadian Imperial Bank | Laurentian Bank vs. Great West Lifeco |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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