Correlation Between Canadian Net and Imperial Equities
Can any of the company-specific risk be diversified away by investing in both Canadian Net and Imperial Equities 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 Net and Imperial Equities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Net Real and Imperial Equities, you can compare the effects of market volatilities on Canadian Net and Imperial Equities 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 Net with a short position of Imperial Equities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Net and Imperial Equities.
Diversification Opportunities for Canadian Net and Imperial Equities
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Canadian and Imperial is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Net Real and Imperial Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Equities and Canadian Net 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 Net Real are associated (or correlated) with Imperial Equities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Equities has no effect on the direction of Canadian Net i.e., Canadian Net and Imperial Equities go up and down completely randomly.
Pair Corralation between Canadian Net and Imperial Equities
Assuming the 90 days trading horizon Canadian Net Real is expected to under-perform the Imperial Equities. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Net Real is 1.49 times less risky than Imperial Equities. The stock trades about 0.0 of its potential returns per unit of risk. The Imperial Equities is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 459.00 in Imperial Equities on August 29, 2024 and sell it today you would lose (11.00) from holding Imperial Equities or give up 2.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Net Real vs. Imperial Equities
Performance |
| Timeline |
| Canadian Net Real |
| Imperial Equities |
Canadian Net and Imperial Equities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Net and Imperial Equities
The main advantage of trading using opposite Canadian Net and Imperial Equities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Net position performs unexpectedly, Imperial Equities 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 Imperial Equities will offset losses from the drop in Imperial Equities' long position.| Canadian Net vs. SmartCentres Real Estate | Canadian Net vs. Dream Industrial Real | Canadian Net vs. RioCan Real Estate | Canadian Net vs. Algonquin Power Utilities |
| Imperial Equities vs. Urbanfund Corp | Imperial Equities vs. Gulf Pacific Equities | Imperial Equities vs. Mongolia Growth Group | Imperial Equities vs. Inventronics |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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