Correlation Between Canadian High and Income Financial

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

By analyzing existing cross correlation between Canadian High Income and Income Financial Trust, you can compare the effects of market volatilities on Canadian High and Income Financial 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 High with a short position of Income Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian High and Income Financial.

Diversification Opportunities for Canadian High and Income Financial

0.0

Correlation Coefficient

Canadian High  Income Financial

Pay attention - limited upside

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

Pair Corralation between Canadian High and Income Financial

If you would invest  774.00  in Income Financial Trust on September 12, 2024 and sell it today you would earn a total of  112.00  from holding Income Financial Trust or generate 14.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Canadian High Income  vs.  Income Financial Trust

Canadian High Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian High Income has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Canadian High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Income Financial Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Income Financial Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Income Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian High and Income Financial

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

The idea behind Canadian High Income and Income Financial Trust 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.