Correlation Between Canadian Utilities and Commerce Energy

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

By analyzing existing cross correlation between Canadian Utilities Limited and Commerce Energy Group, you can compare the effects of market volatilities on Canadian Utilities and Commerce Energy 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 Utilities with a short position of Commerce Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Commerce Energy.

Diversification Opportunities for Canadian Utilities and Commerce Energy

0.0

Correlation Coefficient

Canadian Utilities  Commerce Energy

Pay attention - limited upside

The 3 months correlation between Canadian and Commerce is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Commerce Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Energy Group and Canadian Utilities 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 Utilities Limited are associated (or correlated) with Commerce Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Energy Group has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Commerce Energy go up and down completely randomly.

Pair Corralation between Canadian Utilities and Commerce Energy

If you would invest  2,380  in Canadian Utilities Limited on December 30, 2024 and sell it today you would earn a total of  164.00  from holding Canadian Utilities Limited or generate 6.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Canadian Utilities Limited  vs.  Commerce Energy Group

Canadian Utilities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Utilities Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Canadian Utilities may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Commerce Energy Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commerce Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Commerce Energy is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Canadian Utilities and Commerce Energy

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

The idea behind Canadian Utilities Limited and Commerce Energy Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..