Correlation Between Otter Tail and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Otter Tail and Canadian Utilities 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 Otter Tail and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otter Tail and Canadian Utilities Limited, you can compare the effects of market volatilities on Otter Tail and Canadian Utilities 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 Otter Tail with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otter Tail and Canadian Utilities.
Diversification Opportunities for Otter Tail and Canadian Utilities
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Otter and Canadian is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Otter Tail and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Otter Tail 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 Otter Tail are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Otter Tail i.e., Otter Tail and Canadian Utilities go up and down completely randomly.
Pair Corralation between Otter Tail and Canadian Utilities
Given the investment horizon of 90 days Otter Tail is expected to under-perform the Canadian Utilities. In addition to that, Otter Tail is 1.52 times more volatile than Canadian Utilities Limited. It trades about -0.03 of its total potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.1 per unit of volatility. If you would invest 2,218 in Canadian Utilities Limited on September 1, 2024 and sell it today you would earn a total of 344.00 from holding Canadian Utilities Limited or generate 15.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Otter Tail vs. Canadian Utilities Limited
Performance |
| Timeline |
| Otter Tail |
| Canadian Utilities |
Otter Tail and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otter Tail and Canadian Utilities
The main advantage of trading using opposite Otter Tail and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otter Tail position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| Otter Tail vs. The AES | Otter Tail vs. Avista | Otter Tail vs. Brookfield Infrastructure Partners | Otter Tail vs. Companhia Energetica de |
| Canadian Utilities vs. AuraSource | Canadian Utilities vs. Energy of Minas | Canadian Utilities vs. Allete Inc | Canadian Utilities vs. Avista |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |