Correlation Between Labrador Iron and Canlan Ice
Can any of the company-specific risk be diversified away by investing in both Labrador Iron and Canlan Ice 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 Labrador Iron and Canlan Ice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labrador Iron Ore and Canlan Ice Sports, you can compare the effects of market volatilities on Labrador Iron and Canlan Ice 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 Labrador Iron with a short position of Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Iron and Canlan Ice.
Diversification Opportunities for Labrador Iron and Canlan Ice
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Labrador and Canlan is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Iron Ore and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports and Labrador Iron 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 Labrador Iron Ore are associated (or correlated) with Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of Labrador Iron i.e., Labrador Iron and Canlan Ice go up and down completely randomly.
Pair Corralation between Labrador Iron and Canlan Ice
Assuming the 90 days trading horizon Labrador Iron is expected to generate 1.47 times less return on investment than Canlan Ice. But when comparing it to its historical volatility, Labrador Iron Ore is 1.33 times less risky than Canlan Ice. It trades about 0.05 of its potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 371.00 in Canlan Ice Sports on September 3, 2024 and sell it today you would earn a total of 39.00 from holding Canlan Ice Sports or generate 10.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Labrador Iron Ore vs. Canlan Ice Sports
Performance |
| Timeline |
| Labrador Iron Ore |
| Canlan Ice Sports |
Labrador Iron and Canlan Ice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labrador Iron and Canlan Ice
The main advantage of trading using opposite Labrador Iron and Canlan Ice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Iron position performs unexpectedly, Canlan Ice 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 Canlan Ice will offset losses from the drop in Canlan Ice's long position.| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
| Canlan Ice vs. BMTC Group | Canlan Ice vs. Caldwell Partners International | Canlan Ice vs. TWC Enterprises | Canlan Ice vs. Madison Pacific Properties |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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