Correlation Between TransAlta Corp and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both TransAlta Corp 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 TransAlta Corp and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TransAlta Corp and Canadian Utilities Limited, you can compare the effects of market volatilities on TransAlta Corp 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 TransAlta Corp with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of TransAlta Corp and Canadian Utilities.
Diversification Opportunities for TransAlta Corp and Canadian Utilities
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TransAlta and Canadian is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding TransAlta Corp and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and TransAlta Corp 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 TransAlta Corp 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 TransAlta Corp i.e., TransAlta Corp and Canadian Utilities go up and down completely randomly.
Pair Corralation between TransAlta Corp and Canadian Utilities
Considering the 90-day investment horizon TransAlta Corp is expected to generate 0.87 times more return on investment than Canadian Utilities. However, TransAlta Corp is 1.15 times less risky than Canadian Utilities. It trades about 0.03 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.02 per unit of risk. If you would invest 915.00 in TransAlta Corp on August 24, 2024 and sell it today you would earn a total of 160.00 from holding TransAlta Corp or generate 17.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
TransAlta Corp vs. Canadian Utilities Limited
Performance |
| Timeline |
| TransAlta Corp |
| Canadian Utilities |
TransAlta Corp and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TransAlta Corp and Canadian Utilities
The main advantage of trading using opposite TransAlta Corp and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransAlta Corp 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.| TransAlta Corp vs. Pampa Energia SA | TransAlta Corp vs. Vistra Energy Corp | TransAlta Corp vs. NRG Energy | TransAlta Corp vs. Power Assets Holdings |
| Canadian Utilities vs. TransAlta Corp | Canadian Utilities vs. Pampa Energia SA | Canadian Utilities vs. Vistra Energy Corp | Canadian Utilities vs. NRG Energy |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |