Correlation Between International Tower and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both International Tower 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 International Tower and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Tower Hill and Canadian Utilities Ltd, you can compare the effects of market volatilities on International Tower 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 International Tower with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Tower and Canadian Utilities.
Diversification Opportunities for International Tower and Canadian Utilities
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Canadian is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding International Tower Hill and Canadian Utilities Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and International Tower 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 International Tower Hill 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 International Tower i.e., International Tower and Canadian Utilities go up and down completely randomly.
Pair Corralation between International Tower and Canadian Utilities
Assuming the 90 days trading horizon International Tower Hill is expected to under-perform the Canadian Utilities. In addition to that, International Tower is 4.94 times more volatile than Canadian Utilities Ltd. It trades about -0.02 of its total potential returns per unit of risk. Canadian Utilities Ltd is currently generating about 0.06 per unit of volatility. If you would invest 2,068 in Canadian Utilities Ltd on September 1, 2024 and sell it today you would earn a total of 147.00 from holding Canadian Utilities Ltd or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
International Tower Hill vs. Canadian Utilities Ltd
Performance |
| Timeline |
| International Tower Hill |
| Canadian Utilities |
International Tower and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Tower and Canadian Utilities
The main advantage of trading using opposite International Tower and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Tower 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.| International Tower vs. Xtra Gold Resources Corp | International Tower vs. Loncor Resources | International Tower vs. TRX Gold Corp |
| Canadian Utilities vs. Altair Resources | Canadian Utilities vs. Arizona Metals Corp | Canadian Utilities vs. DRI Healthcare Trust | Canadian Utilities vs. Talon Metals Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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