Correlation Between Canadian General and DelphX Capital

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

Diversification Opportunities for Canadian General and DelphX Capital

-0.13

Correlation Coefficient

Canadian General  DelphX Capital

Good diversification

The 3 months correlation between Canadian and DelphX is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and DelphX Capital Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DelphX Capital Markets 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 DelphX Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DelphX Capital Markets has no effect on the direction of Canadian General i.e., Canadian General and DelphX Capital go up and down completely randomly.

Pair Corralation between Canadian General and DelphX Capital

Assuming the 90 days trading horizon Canadian General is expected to generate 4.05 times less return on investment than DelphX Capital. But when comparing it to its historical volatility, Canadian General Investments is 7.81 times less risky than DelphX Capital. It trades about 0.07 of its potential returns per unit of risk. DelphX Capital Markets is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  16.00  in DelphX Capital Markets on October 9, 2024 and sell it today you would lose (2.00) from holding DelphX Capital Markets or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Canadian General Investments  vs.  DelphX Capital Markets

Canadian General Inv

Risk-Adjusted Performance

6 of 100

Insignificant

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 very healthy forward indicators, Canadian General is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

DelphX Capital Markets

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DelphX Capital Markets are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, DelphX Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian General and DelphX Capital

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

The idea behind Canadian General Investments and DelphX Capital Markets 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.