Correlation Between Stellar and Canadian General
Can any of the company-specific risk be diversified away by investing in both Stellar and Canadian General 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 Stellar and Canadian General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and Canadian General Investments, you can compare the effects of market volatilities on Stellar and Canadian General 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 Stellar with a short position of Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Canadian General.
Diversification Opportunities for Stellar and Canadian General
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Stellar and Canadian is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv and Stellar 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 Stellar are associated (or correlated) with Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Stellar i.e., Stellar and Canadian General go up and down completely randomly.
Pair Corralation between Stellar and Canadian General
Assuming the 90 days trading horizon Stellar is expected to generate 8.76 times more return on investment than Canadian General. However, Stellar is 8.76 times more volatile than Canadian General Investments. It trades about 0.01 of its potential returns per unit of risk. Canadian General Investments is currently generating about -0.24 per unit of risk. If you would invest 44.00 in Stellar on October 10, 2024 and sell it today you would lose (2.00) from holding Stellar or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.91% |
| Values | Daily Returns |
Stellar vs. Canadian General Investments
Performance |
| Timeline |
| Stellar |
| Canadian General Inv |
Stellar and Canadian General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and Canadian General
The main advantage of trading using opposite Stellar and Canadian General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, Canadian General 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 General will offset losses from the drop in Canadian General's long position.The idea behind Stellar and Canadian General Investments 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 General vs. Associated British Foods | Canadian General vs. Travel Leisure Co | Canadian General vs. Beazer Homes USA | Canadian General vs. bet at home AG |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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