Correlation Between KDA and Capital Power
Can any of the company-specific risk be diversified away by investing in both KDA and Capital Power 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 KDA and Capital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KDA Group and Capital Power, you can compare the effects of market volatilities on KDA and Capital Power 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 KDA with a short position of Capital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of KDA and Capital Power.
Diversification Opportunities for KDA and Capital Power
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KDA and Capital is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding KDA Group and Capital Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Power and KDA 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 KDA Group are associated (or correlated) with Capital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Power has no effect on the direction of KDA i.e., KDA and Capital Power go up and down completely randomly.
Pair Corralation between KDA and Capital Power
Assuming the 90 days horizon KDA Group is expected to generate 5.16 times more return on investment than Capital Power. However, KDA is 5.16 times more volatile than Capital Power. It trades about 0.07 of its potential returns per unit of risk. Capital Power is currently generating about 0.18 per unit of risk. If you would invest 14.00 in KDA Group on September 2, 2024 and sell it today you would earn a total of 13.00 from holding KDA Group or generate 92.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KDA Group vs. Capital Power
Performance |
| Timeline |
| KDA Group |
| Capital Power |
KDA and Capital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KDA and Capital Power
The main advantage of trading using opposite KDA and Capital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KDA position performs unexpectedly, Capital Power 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 Capital Power will offset losses from the drop in Capital Power's long position.| KDA vs. Advent Wireless | KDA vs. Bird Construction | KDA vs. Information Services | KDA vs. Primaris Retail RE |
| Capital Power vs. Canadian Utilities Limited | Capital Power vs. Emera Inc | Capital Power vs. Keyera Corp | Capital Power vs. Northland Power |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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