Correlation Between Cielo Waste and Canso Credit

Can any of the company-specific risk be diversified away by investing in both Cielo Waste and Canso Credit 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 Cielo Waste and Canso Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cielo Waste Solutions and Canso Credit Trust, you can compare the effects of market volatilities on Cielo Waste and Canso Credit 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 Cielo Waste with a short position of Canso Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cielo Waste and Canso Credit.

Diversification Opportunities for Cielo Waste and Canso Credit

-0.79

Correlation Coefficient

Cielo Waste  Canso Credit

Pay attention - limited upside

The 3 months correlation between Cielo and Canso is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cielo Waste Solutions and Canso Credit Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canso Credit Trust and Cielo Waste 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 Cielo Waste Solutions are associated (or correlated) with Canso Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canso Credit Trust has no effect on the direction of Cielo Waste i.e., Cielo Waste and Canso Credit go up and down completely randomly.

Pair Corralation between Cielo Waste and Canso Credit

Assuming the 90 days horizon Cielo Waste Solutions is expected to under-perform the Canso Credit. In addition to that, Cielo Waste is 16.17 times more volatile than Canso Credit Trust. It trades about -0.04 of its total potential returns per unit of risk. Canso Credit Trust is currently generating about 0.12 per unit of volatility. If you would invest  1,392  in Canso Credit Trust on October 7, 2024 and sell it today you would earn a total of  195.00  from holding Canso Credit Trust or generate 14.01% return on investment over 90 days.

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

Cielo Waste Solutions  vs.  Canso Credit Trust

Cielo Waste Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cielo Waste Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Canso Credit Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Credit Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canso Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cielo Waste and Canso Credit

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

The idea behind Cielo Waste Solutions and Canso Credit 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.