Correlation Between Western Investment and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Western Investment 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 Western Investment and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and Canadian Utilities Ltd, you can compare the effects of market volatilities on Western Investment 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 Western Investment with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and Canadian Utilities.
Diversification Opportunities for Western Investment and Canadian Utilities
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Canadian is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and Canadian Utilities Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Western Investment 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 Western Investment 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 Western Investment i.e., Western Investment and Canadian Utilities go up and down completely randomly.
Pair Corralation between Western Investment and Canadian Utilities
Given the investment horizon of 90 days Western Investment is expected to under-perform the Canadian Utilities. In addition to that, Western Investment is 4.46 times more volatile than Canadian Utilities Ltd. It trades about -0.04 of its total potential returns per unit of risk. Canadian Utilities Ltd is currently generating about -0.06 per unit of volatility. If you would invest 2,250 in Canadian Utilities Ltd on November 4, 2024 and sell it today you would lose (20.00) from holding Canadian Utilities Ltd or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Investment vs. Canadian Utilities Ltd
Performance |
| Timeline |
| Western Investment |
| Canadian Utilities |
Western Investment and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and Canadian Utilities
The main advantage of trading using opposite Western Investment and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment 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.| Western Investment vs. Caribbean Utilities | Western Investment vs. Titanium Transportation Group | Western Investment vs. Canadian Utilities Limited | Western Investment vs. Converge Technology Solutions |
| Canadian Utilities vs. Mako Mining Corp | Canadian Utilities vs. T2 Metals Corp | Canadian Utilities vs. Data Communications Management | Canadian Utilities vs. Caribbean Utilities |
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.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |