Correlation Between Northstar Clean and Canadian General
Can any of the company-specific risk be diversified away by investing in both Northstar Clean and Canadian General 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 Northstar Clean and Canadian General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northstar Clean Technologies and Canadian General Investments, you can compare the effects of market volatilities on Northstar Clean and Canadian General 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 Northstar Clean with a short position of Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and Canadian General.
Diversification Opportunities for Northstar Clean and Canadian General
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northstar and Canadian is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv and Northstar Clean 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 Northstar Clean Technologies are associated (or correlated) with Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Northstar Clean i.e., Northstar Clean and Canadian General go up and down completely randomly.
Pair Corralation between Northstar Clean and Canadian General
Assuming the 90 days trading horizon Northstar Clean Technologies is expected to generate 3.63 times more return on investment than Canadian General. However, Northstar Clean is 3.63 times more volatile than Canadian General Investments. It trades about 0.06 of its potential returns per unit of risk. Canadian General Investments is currently generating about 0.08 per unit of risk. If you would invest 23.00 in Northstar Clean Technologies on August 31, 2024 and sell it today you would earn a total of 6.00 from holding Northstar Clean Technologies or generate 26.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Northstar Clean Technologies vs. Canadian General Investments
Performance |
| Timeline |
| Northstar Clean Tech |
| Canadian General Inv |
Northstar Clean and Canadian General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northstar Clean and Canadian General
The main advantage of trading using opposite Northstar Clean and Canadian General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northstar Clean position performs unexpectedly, Canadian General 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 General will offset losses from the drop in Canadian General's long position.The idea behind Northstar Clean Technologies and Canadian General Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Canadian General vs. iShares Canadian HYBrid | Canadian General vs. Brompton European Dividend | Canadian General vs. Solar Alliance Energy | Canadian General vs. PHN Multi Style All Cap |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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