Correlation Between UPS CDR and ATCO
Can any of the company-specific risk be diversified away by investing in both UPS CDR and ATCO 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 UPS CDR and ATCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UPS CDR and ATCO, you can compare the effects of market volatilities on UPS CDR and ATCO 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 UPS CDR with a short position of ATCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPS CDR and ATCO.
Diversification Opportunities for UPS CDR and ATCO
Poor diversification
The 3 months correlation between UPS and ATCO is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding UPS CDR and ATCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATCO and UPS CDR 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 UPS CDR are associated (or correlated) with ATCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATCO has no effect on the direction of UPS CDR i.e., UPS CDR and ATCO go up and down completely randomly.
Pair Corralation between UPS CDR and ATCO
Assuming the 90 days trading horizon UPS CDR is expected to generate 0.74 times more return on investment than ATCO. However, UPS CDR is 1.35 times less risky than ATCO. It trades about 0.11 of its potential returns per unit of risk. ATCO is currently generating about 0.07 per unit of risk. If you would invest 1,734 in UPS CDR on September 1, 2024 and sell it today you would earn a total of 57.00 from holding UPS CDR or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPS CDR vs. ATCO
Performance |
| Timeline |
| UPS CDR |
| ATCO |
UPS CDR and ATCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPS CDR and ATCO
The main advantage of trading using opposite UPS CDR and ATCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPS CDR position performs unexpectedly, ATCO 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 ATCO will offset losses from the drop in ATCO's long position.| UPS CDR vs. Ramp Metals | UPS CDR vs. Atrium Mortgage Investment | UPS CDR vs. NeXGold Mining Corp | UPS CDR vs. Maple Peak Investments |
| ATCO vs. Computer Modelling Group | ATCO vs. Richelieu Hardware | ATCO vs. Economic Investment Trust | ATCO vs. Highwood Asset Management |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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