Correlation Between Altagas Cum and Simply Better

Can any of the company-specific risk be diversified away by investing in both Altagas Cum and Simply Better 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 Simply Better 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 Simply Better Brands, you can compare the effects of market volatilities on Altagas Cum and Simply Better 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 Simply Better. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altagas Cum and Simply Better.

Diversification Opportunities for Altagas Cum and Simply Better

0.9

Correlation Coefficient

Altagas Cum  Simply Better

Almost no diversification

The 3 months correlation between Altagas and Simply is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Altagas Cum Red and Simply Better Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Better Brands 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 Simply Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Better Brands has no effect on the direction of Altagas Cum i.e., Altagas Cum and Simply Better go up and down completely randomly.

Pair Corralation between Altagas Cum and Simply Better

Assuming the 90 days trading horizon Altagas Cum is expected to generate 5.01 times less return on investment than Simply Better. But when comparing it to its historical volatility, Altagas Cum Red is 4.7 times less risky than Simply Better. It trades about 0.08 of its potential returns per unit of risk. Simply Better Brands is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Simply Better Brands on September 20, 2024 and sell it today you would earn a total of  79.00  from holding Simply Better Brands or generate 329.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Altagas Cum Red  vs.  Simply Better Brands

Altagas Cum Red

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altagas Cum Red are ranked lower than 10 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Simply Better Brands

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simply Better Brands are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental drivers, Simply Better showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altagas Cum and Simply Better

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

The idea behind Altagas Cum Red and Simply Better Brands 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.