Correlation Between Richelieu Hardware and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Richelieu Hardware 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 Richelieu Hardware and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richelieu Hardware and Canadian Utilities Limited, you can compare the effects of market volatilities on Richelieu Hardware 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 Richelieu Hardware with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richelieu Hardware and Canadian Utilities.
Diversification Opportunities for Richelieu Hardware and Canadian Utilities
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Richelieu and Canadian is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Richelieu Hardware 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 Richelieu Hardware 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 Richelieu Hardware i.e., Richelieu Hardware and Canadian Utilities go up and down completely randomly.
Pair Corralation between Richelieu Hardware and Canadian Utilities
Assuming the 90 days trading horizon Richelieu Hardware is expected to generate 1.49 times more return on investment than Canadian Utilities. However, Richelieu Hardware is 1.49 times more volatile than Canadian Utilities Limited. It trades about -0.04 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about -0.09 per unit of risk. If you would invest 3,835 in Richelieu Hardware on September 21, 2024 and sell it today you would lose (56.00) from holding Richelieu Hardware or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Richelieu Hardware vs. Canadian Utilities Limited
Performance |
| Timeline |
| Richelieu Hardware |
| Canadian Utilities |
Richelieu Hardware and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richelieu Hardware and Canadian Utilities
The main advantage of trading using opposite Richelieu Hardware and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richelieu Hardware 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.| Richelieu Hardware vs. Stella Jones | Richelieu Hardware vs. Winpak | Richelieu Hardware vs. Gildan Activewear | Richelieu Hardware vs. Ritchie Bros Auctioneers |
| Canadian Utilities vs. Fortis Inc | Canadian Utilities vs. Emera Inc | Canadian Utilities vs. Algonquin Power Utilities | Canadian Utilities vs. ATCO |
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 CEOs Directory module to screen CEOs from public companies around the world.
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