Correlation Between Canso Credit and Major Drilling
Can any of the company-specific risk be diversified away by investing in both Canso Credit and Major Drilling 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 Canso Credit and Major Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canso Credit Trust and Major Drilling Group, you can compare the effects of market volatilities on Canso Credit and Major Drilling 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 Canso Credit with a short position of Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canso Credit and Major Drilling.
Diversification Opportunities for Canso Credit and Major Drilling
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canso and Major is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Canso Credit Trust and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group and Canso Credit 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 Canso Credit Trust are associated (or correlated) with Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of Canso Credit i.e., Canso Credit and Major Drilling go up and down completely randomly.
Pair Corralation between Canso Credit and Major Drilling
Assuming the 90 days trading horizon Canso Credit is expected to generate 3.49 times less return on investment than Major Drilling. But when comparing it to its historical volatility, Canso Credit Trust is 6.83 times less risky than Major Drilling. It trades about 0.21 of its potential returns per unit of risk. Major Drilling Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 815.00 in Major Drilling Group on September 3, 2024 and sell it today you would earn a total of 44.00 from holding Major Drilling Group or generate 5.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canso Credit Trust vs. Major Drilling Group
Performance |
| Timeline |
| Canso Credit Trust |
| Major Drilling Group |
Canso Credit and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canso Credit and Major Drilling
The main advantage of trading using opposite Canso Credit and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canso Credit position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| Canso Credit vs. MINT Income Fund | Canso Credit vs. Canadian High Income | Canso Credit vs. Blue Ribbon Income | Canso Credit vs. Australian REIT Income |
| Major Drilling vs. Algoma Steel Group | Major Drilling vs. Champion Iron | Major Drilling vs. International Zeolite Corp | Major Drilling vs. European Residential Real |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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