Correlation Between North American and CN MODERN
Can any of the company-specific risk be diversified away by investing in both North American and CN MODERN 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 North American and CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Construction and CN MODERN DAIRY, you can compare the effects of market volatilities on North American and CN MODERN 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 North American with a short position of CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and CN MODERN.
Diversification Opportunities for North American and CN MODERN
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between North and 07M is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY and North American 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 North American Construction are associated (or correlated) with CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of North American i.e., North American and CN MODERN go up and down completely randomly.
Pair Corralation between North American and CN MODERN
Assuming the 90 days horizon North American Construction is expected to generate 0.59 times more return on investment than CN MODERN. However, North American Construction is 1.69 times less risky than CN MODERN. It trades about 0.14 of its potential returns per unit of risk. CN MODERN DAIRY is currently generating about 0.01 per unit of risk. If you would invest 1,868 in North American Construction on October 10, 2024 and sell it today you would earn a total of 232.00 from holding North American Construction or generate 12.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Construction vs. CN MODERN DAIRY
Performance |
| Timeline |
| North American Const |
| CN MODERN DAIRY |
North American and CN MODERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and CN MODERN
The main advantage of trading using opposite North American and CN MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, CN MODERN 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 CN MODERN will offset losses from the drop in CN MODERN's long position.| North American vs. Superior Plus Corp | North American vs. NMI Holdings | North American vs. SIVERS SEMICONDUCTORS AB | North American vs. Talanx AG |
| CN MODERN vs. ALTAIR RES INC | CN MODERN vs. The Hanover Insurance | CN MODERN vs. Direct Line Insurance | CN MODERN vs. REVO INSURANCE SPA |
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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