Correlation Between Ritchie Bros and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Ritchie Bros 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 Ritchie Bros and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ritchie Bros Auctioneers and Canadian Utilities Ltd, you can compare the effects of market volatilities on Ritchie Bros 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 Ritchie Bros with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ritchie Bros and Canadian Utilities.
Diversification Opportunities for Ritchie Bros and Canadian Utilities
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ritchie and Canadian is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ritchie Bros Auctioneers and Canadian Utilities Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Ritchie Bros 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 Ritchie Bros Auctioneers 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 Ritchie Bros i.e., Ritchie Bros and Canadian Utilities go up and down completely randomly.
Pair Corralation between Ritchie Bros and Canadian Utilities
Assuming the 90 days trading horizon Ritchie Bros Auctioneers is expected to generate 1.16 times more return on investment than Canadian Utilities. However, Ritchie Bros is 1.16 times more volatile than Canadian Utilities Ltd. It trades about 0.23 of its potential returns per unit of risk. Canadian Utilities Ltd is currently generating about 0.08 per unit of risk. If you would invest 12,923 in Ritchie Bros Auctioneers on September 13, 2024 and sell it today you would earn a total of 669.00 from holding Ritchie Bros Auctioneers or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ritchie Bros Auctioneers vs. Canadian Utilities Ltd
Performance |
| Timeline |
| Ritchie Bros Auctioneers |
| Canadian Utilities |
Ritchie Bros and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ritchie Bros and Canadian Utilities
The main advantage of trading using opposite Ritchie Bros and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ritchie Bros 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.| Ritchie Bros vs. Flow Beverage Corp | Ritchie Bros vs. iShares Canadian HYBrid | Ritchie Bros vs. Altagas Cum Red | Ritchie Bros vs. European Residential Real |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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