Correlation Between Altagas Cum and CAE

Can any of the company-specific risk be diversified away by investing in both Altagas Cum and CAE 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 Altagas Cum and CAE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altagas Cum Red and CAE Inc, you can compare the effects of market volatilities on Altagas Cum and CAE 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 Altagas Cum with a short position of CAE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altagas Cum and CAE.

Diversification Opportunities for Altagas Cum and CAE

0.68

Correlation Coefficient

Altagas Cum  CAE

Poor diversification

The 3 months correlation between Altagas and CAE is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Altagas Cum Red and CAE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAE Inc and Altagas Cum 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 Altagas Cum Red are associated (or correlated) with CAE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAE Inc has no effect on the direction of Altagas Cum i.e., Altagas Cum and CAE go up and down completely randomly.

Pair Corralation between Altagas Cum and CAE

Assuming the 90 days trading horizon Altagas Cum Red is expected to generate 0.46 times more return on investment than CAE. However, Altagas Cum Red is 2.19 times less risky than CAE. It trades about 0.78 of its potential returns per unit of risk. CAE Inc is currently generating about 0.34 per unit of risk. If you would invest  1,840  in Altagas Cum Red on September 16, 2024 and sell it today you would earn a total of  160.00  from holding Altagas Cum Red or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Altagas Cum Red  vs.  CAE Inc

Altagas Cum Red

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altagas Cum Red are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Altagas Cum is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CAE Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CAE Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, CAE displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altagas Cum and CAE

The main advantage of trading using opposite Altagas Cum and CAE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altagas Cum position performs unexpectedly, CAE 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 CAE will offset losses from the drop in CAE's long position.

The idea behind Altagas Cum Red and CAE Inc 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..