Correlation Between Canadian Western and 1895 Of

Can any of the company-specific risk be diversified away by investing in both Canadian Western and 1895 Of 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 Canadian Western and 1895 Of into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canadian Western Bank and 1895 of Wisconsin, you can compare the effects of market volatilities on Canadian Western and 1895 Of 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 Canadian Western with a short position of 1895 Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Western and 1895 Of.

Diversification Opportunities for Canadian Western and 1895 Of

0.44

Correlation Coefficient

Canadian Western  1895 Of

Very weak diversification

The 3 months correlation between Canadian and 1895 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Western Bank and 1895 of Wisconsin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1895 of Wisconsin and Canadian Western 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 Canadian Western Bank are associated (or correlated) with 1895 Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1895 of Wisconsin has no effect on the direction of Canadian Western i.e., Canadian Western and 1895 Of go up and down completely randomly.

Pair Corralation between Canadian Western and 1895 Of

Assuming the 90 days horizon Canadian Western Bank is expected to under-perform the 1895 Of. In addition to that, Canadian Western is 4.49 times more volatile than 1895 of Wisconsin. It trades about -0.18 of its total potential returns per unit of risk. 1895 of Wisconsin is currently generating about 0.06 per unit of volatility. If you would invest  990.00  in 1895 of Wisconsin on September 21, 2024 and sell it today you would earn a total of  5.00  from holding 1895 of Wisconsin or generate 0.51% return on investment over 90 days.

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

Canadian Western Bank  vs.  1895 of Wisconsin

Canadian Western Bank

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Canadian Western Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Canadian Western is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

1895 of Wisconsin

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 1895 of Wisconsin are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, 1895 Of may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Canadian Western and 1895 Of

The main advantage of trading using opposite Canadian Western and 1895 Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Western position performs unexpectedly, 1895 Of 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 1895 Of will offset losses from the drop in 1895 Of's long position.

The idea behind Canadian Western Bank and 1895 of Wisconsin 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.