Correlation Between Canlan Ice and North American
Can any of the company-specific risk be diversified away by investing in both Canlan Ice and North American 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 North American 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 North American Construction, you can compare the effects of market volatilities on Canlan Ice and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and North American.
Diversification Opportunities for Canlan Ice and North American
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canlan and North is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of Canlan Ice i.e., Canlan Ice and North American go up and down completely randomly.
Pair Corralation between Canlan Ice and North American
Assuming the 90 days trading horizon Canlan Ice is expected to generate 3.23 times less return on investment than North American. But when comparing it to its historical volatility, Canlan Ice Sports is 1.29 times less risky than North American. It trades about 0.02 of its potential returns per unit of risk. North American Construction is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,734 in North American Construction on September 2, 2024 and sell it today you would earn a total of 1,124 from holding North American Construction or generate 64.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canlan Ice Sports vs. North American Construction
Performance |
| Timeline |
| Canlan Ice Sports |
| North American Const |
Canlan Ice and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and North American
The main advantage of trading using opposite Canlan Ice and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice position performs unexpectedly, North American 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 North American will offset losses from the drop in North American'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 |
| North American vs. PHX Energy Services | North American vs. CES Energy Solutions | North American vs. Total Energy Services | North American vs. Pason Systems |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |