Correlation Between INFORMATION SVC and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both INFORMATION SVC 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 INFORMATION SVC and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INFORMATION SVC GRP and Canadian Utilities Limited, you can compare the effects of market volatilities on INFORMATION SVC 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 INFORMATION SVC with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFORMATION SVC and Canadian Utilities.
Diversification Opportunities for INFORMATION SVC and Canadian Utilities
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INFORMATION and Canadian is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and INFORMATION SVC 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 INFORMATION SVC GRP 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 INFORMATION SVC i.e., INFORMATION SVC and Canadian Utilities go up and down completely randomly.
Pair Corralation between INFORMATION SVC and Canadian Utilities
Assuming the 90 days horizon INFORMATION SVC GRP is expected to under-perform the Canadian Utilities. In addition to that, INFORMATION SVC is 2.14 times more volatile than Canadian Utilities Limited. It trades about -0.19 of its total potential returns per unit of risk. Canadian Utilities Limited is currently generating about -0.23 per unit of volatility. If you would invest 2,345 in Canadian Utilities Limited on November 6, 2024 and sell it today you would lose (101.00) from holding Canadian Utilities Limited or give up 4.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INFORMATION SVC GRP vs. Canadian Utilities Limited
Performance |
| Timeline |
| INFORMATION SVC GRP |
| Canadian Utilities |
INFORMATION SVC and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INFORMATION SVC and Canadian Utilities
The main advantage of trading using opposite INFORMATION SVC and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFORMATION SVC 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.| INFORMATION SVC vs. PennyMac Mortgage Investment | INFORMATION SVC vs. GOME Retail Holdings | INFORMATION SVC vs. CDL INVESTMENT | INFORMATION SVC vs. SLR Investment Corp |
| Canadian Utilities vs. HYATT HOTELS A | Canadian Utilities vs. Sunstone Hotel Investors | Canadian Utilities vs. Regal Hotels International | Canadian Utilities vs. NH HOTEL GROUP |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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