Correlation Between Canadian Life and Prime Dividend
Can any of the company-specific risk be diversified away by investing in both Canadian Life and Prime Dividend 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 Canadian Life and Prime Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Life Companies and Prime Dividend Corp, you can compare the effects of market volatilities on Canadian Life and Prime Dividend 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 Canadian Life with a short position of Prime Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Life and Prime Dividend.
Diversification Opportunities for Canadian Life and Prime Dividend
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canadian and Prime is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Life Companies and Prime Dividend Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Dividend Corp and Canadian Life 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 Canadian Life Companies are associated (or correlated) with Prime Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Dividend Corp has no effect on the direction of Canadian Life i.e., Canadian Life and Prime Dividend go up and down completely randomly.
Pair Corralation between Canadian Life and Prime Dividend
Assuming the 90 days trading horizon Canadian Life is expected to generate 3.96 times less return on investment than Prime Dividend. But when comparing it to its historical volatility, Canadian Life Companies is 5.09 times less risky than Prime Dividend. It trades about 0.19 of its potential returns per unit of risk. Prime Dividend Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 624.00 in Prime Dividend Corp on October 26, 2024 and sell it today you would earn a total of 206.00 from holding Prime Dividend Corp or generate 33.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Life Companies vs. Prime Dividend Corp
Performance |
| Timeline |
| Canadian Life Companies |
| Prime Dividend Corp |
Canadian Life and Prime Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Life and Prime Dividend
The main advantage of trading using opposite Canadian Life and Prime Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Life position performs unexpectedly, Prime Dividend 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 Prime Dividend will offset losses from the drop in Prime Dividend's long position.| Canadian Life vs. Sun Peak Metals | Canadian Life vs. Ramp Metals | Canadian Life vs. Upstart Investments | Canadian Life vs. Mako Mining Corp |
| Prime Dividend vs. TDb Split Corp | Prime Dividend vs. Dividend Select 15 | Prime Dividend vs. Canadian Life Companies | Prime Dividend vs. Brompton Lifeco Split |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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