Correlation Between Canadian General and Mobile Tornado

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

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

Diversification Opportunities for Canadian General and Mobile Tornado

0.62

Correlation Coefficient

Canadian General  Mobile Tornado

Poor diversification

The 3 months correlation between Canadian and Mobile is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Mobile Tornado Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Tornado Group and Canadian General 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 General Investments are associated (or correlated) with Mobile Tornado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Tornado Group has no effect on the direction of Canadian General i.e., Canadian General and Mobile Tornado go up and down completely randomly.

Pair Corralation between Canadian General and Mobile Tornado

Assuming the 90 days trading horizon Canadian General Investments is expected to under-perform the Mobile Tornado. But the stock apears to be less risky and, when comparing its historical volatility, Canadian General Investments is 1.86 times less risky than Mobile Tornado. The stock trades about -0.1 of its potential returns per unit of risk. The Mobile Tornado Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  135.00  in Mobile Tornado Group on December 23, 2024 and sell it today you would lose (10.00) from holding Mobile Tornado Group or give up 7.41% of portfolio value over 90 days.

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

Canadian General Investments  vs.  Mobile Tornado Group

Canadian General Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canadian General Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Mobile Tornado Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mobile Tornado Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mobile Tornado is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Canadian General and Mobile Tornado

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

The idea behind Canadian General Investments and Mobile Tornado 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.

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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.