Correlation Between TRADEGATE and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both TRADEGATE 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 TRADEGATE and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRADEGATE and Canadian Utilities Limited, you can compare the effects of market volatilities on TRADEGATE 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 TRADEGATE with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRADEGATE and Canadian Utilities.
Diversification Opportunities for TRADEGATE and Canadian Utilities
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between TRADEGATE and Canadian is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and TRADEGATE 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 TRADEGATE 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 TRADEGATE i.e., TRADEGATE and Canadian Utilities go up and down completely randomly.
Pair Corralation between TRADEGATE and Canadian Utilities
Assuming the 90 days trading horizon TRADEGATE is expected to under-perform the Canadian Utilities. In addition to that, TRADEGATE is 1.23 times more volatile than Canadian Utilities Limited. It trades about -0.12 of its total potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.13 per unit of volatility. If you would invest 2,007 in Canadian Utilities Limited on September 3, 2024 and sell it today you would earn a total of 392.00 from holding Canadian Utilities Limited or generate 19.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRADEGATE vs. Canadian Utilities Limited
Performance |
| Timeline |
| TRADEGATE |
| Canadian Utilities |
TRADEGATE and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRADEGATE and Canadian Utilities
The main advantage of trading using opposite TRADEGATE and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRADEGATE 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.The idea behind TRADEGATE and Canadian Utilities Limited 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 Utilities vs. MAVEN WIRELESS SWEDEN | Canadian Utilities vs. Citic Telecom International | Canadian Utilities vs. Tower One Wireless | Canadian Utilities vs. Chunghwa Telecom Co |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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