Correlation Between Canlan Ice and Western Investment
Can any of the company-specific risk be diversified away by investing in both Canlan Ice and Western Investment 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 Western Investment 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 Western Investment, you can compare the effects of market volatilities on Canlan Ice and Western Investment 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 Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Western Investment.
Diversification Opportunities for Canlan Ice and Western Investment
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canlan and Western is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment 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 Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Canlan Ice i.e., Canlan Ice and Western Investment go up and down completely randomly.
Pair Corralation between Canlan Ice and Western Investment
Assuming the 90 days trading horizon Canlan Ice is expected to generate 3.94 times less return on investment than Western Investment. But when comparing it to its historical volatility, Canlan Ice Sports is 2.13 times less risky than Western Investment. It trades about 0.02 of its potential returns per unit of risk. Western Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 37.00 in Western Investment on September 24, 2024 and sell it today you would earn a total of 16.00 from holding Western Investment or generate 43.24% 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. Western Investment
Performance |
| Timeline |
| Canlan Ice Sports |
| Western Investment |
Canlan Ice and Western Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and Western Investment
The main advantage of trading using opposite Canlan Ice and Western Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice position performs unexpectedly, Western Investment 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 Western Investment will offset losses from the drop in Western Investment'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 |
| Western Investment vs. Maple Leaf Foods | Western Investment vs. Canlan Ice Sports | Western Investment vs. HPQ Silicon Resources | Western Investment vs. Slate Grocery REIT |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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