Correlation Between United Homes and Canlan Ice
Can any of the company-specific risk be diversified away by investing in both United Homes and Canlan Ice 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 United Homes and Canlan Ice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Homes Group and Canlan Ice Sports, you can compare the effects of market volatilities on United Homes and Canlan Ice 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 United Homes with a short position of Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Homes and Canlan Ice.
Diversification Opportunities for United Homes and Canlan Ice
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Canlan is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding United Homes Group and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports and United Homes 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 United Homes Group are associated (or correlated) with Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of United Homes i.e., United Homes and Canlan Ice go up and down completely randomly.
Pair Corralation between United Homes and Canlan Ice
Considering the 90-day investment horizon United Homes Group is expected to generate 33.71 times more return on investment than Canlan Ice. However, United Homes is 33.71 times more volatile than Canlan Ice Sports. It trades about 0.04 of its potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.15 per unit of risk. If you would invest 568.00 in United Homes Group on September 1, 2024 and sell it today you would earn a total of 70.00 from holding United Homes Group or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Homes Group vs. Canlan Ice Sports
Performance |
| Timeline |
| United Homes Group |
| Canlan Ice Sports |
United Homes and Canlan Ice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Homes and Canlan Ice
The main advantage of trading using opposite United Homes and Canlan Ice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Homes position performs unexpectedly, Canlan Ice 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 Canlan Ice will offset losses from the drop in Canlan Ice's long position.| United Homes vs. AmTrust Financial Services | United Homes vs. Artisan Partners Asset | United Homes vs. Marine Products | United Homes vs. Juniata Valley Financial |
| Canlan Ice vs. Philip Morris International | Canlan Ice vs. Ambev SA ADR | Canlan Ice vs. Japan Tobacco ADR | Canlan Ice vs. Compania Cervecerias Unidas |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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