Correlation Between RETAIL FOOD and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD 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 RETAIL FOOD and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and Canadian Utilities Limited, you can compare the effects of market volatilities on RETAIL FOOD 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 RETAIL FOOD with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and Canadian Utilities.
Diversification Opportunities for RETAIL FOOD and Canadian Utilities
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RETAIL and Canadian is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and RETAIL FOOD 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 RETAIL FOOD GROUP 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 RETAIL FOOD i.e., RETAIL FOOD and Canadian Utilities go up and down completely randomly.
Pair Corralation between RETAIL FOOD and Canadian Utilities
Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to generate 1.93 times more return on investment than Canadian Utilities. However, RETAIL FOOD is 1.93 times more volatile than Canadian Utilities Limited. It trades about 0.21 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.18 per unit of risk. If you would invest 3.75 in RETAIL FOOD GROUP on September 1, 2024 and sell it today you would earn a total of 0.45 from holding RETAIL FOOD GROUP or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RETAIL FOOD GROUP vs. Canadian Utilities Limited
Performance |
| Timeline |
| RETAIL FOOD GROUP |
| Canadian Utilities |
RETAIL FOOD and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RETAIL FOOD and Canadian Utilities
The main advantage of trading using opposite RETAIL FOOD and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD 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.| RETAIL FOOD vs. Gamma Communications plc | RETAIL FOOD vs. Entravision Communications | RETAIL FOOD vs. COMBA TELECOM SYST | RETAIL FOOD vs. Computer And Technologies |
| Canadian Utilities vs. ATRESMEDIA | Canadian Utilities vs. Lamar Advertising | Canadian Utilities vs. CARSALESCOM | Canadian Utilities vs. PLAYTIKA HOLDING DL 01 |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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