Correlation Between Canadian General and Supermarket Income

Can any of the company-specific risk be diversified away by investing in both Canadian General and Supermarket Income 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 Supermarket Income 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 Supermarket Income REIT, you can compare the effects of market volatilities on Canadian General and Supermarket Income 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 Supermarket Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Supermarket Income.

Diversification Opportunities for Canadian General and Supermarket Income

0.02

Correlation Coefficient

Canadian General  Supermarket Income

Significant diversification

The 3 months correlation between Canadian and Supermarket is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT 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 Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of Canadian General i.e., Canadian General and Supermarket Income go up and down completely randomly.

Pair Corralation between Canadian General and Supermarket Income

Assuming the 90 days trading horizon Canadian General Investments is expected to under-perform the Supermarket Income. But the stock apears to be less risky and, when comparing its historical volatility, Canadian General Investments is 1.14 times less risky than Supermarket Income. The stock trades about -0.24 of its potential returns per unit of risk. The Supermarket Income REIT is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  7,030  in Supermarket Income REIT on October 10, 2024 and sell it today you would lose (270.00) from holding Supermarket Income REIT or give up 3.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Canadian General Investments  vs.  Supermarket Income REIT

Canadian General Inv

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Canadian General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Supermarket Income REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Supermarket Income REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Supermarket Income is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Canadian General and Supermarket Income

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

The idea behind Canadian General Investments and Supermarket Income REIT 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.