Correlation Between Canon Marketing and Ensign

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

By analyzing existing cross correlation between Canon Marketing Japan and The Ensign Group, you can compare the effects of market volatilities on Canon Marketing and Ensign 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 Canon Marketing with a short position of Ensign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon Marketing and Ensign.

Diversification Opportunities for Canon Marketing and Ensign

-0.51

Correlation Coefficient

Canon Marketing  Ensign

Excellent diversification

The 3 months correlation between Canon and Ensign is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Canon Marketing Japan and The Ensign Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Group and Canon Marketing 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 Canon Marketing Japan are associated (or correlated) with Ensign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Group has no effect on the direction of Canon Marketing i.e., Canon Marketing and Ensign go up and down completely randomly.

Pair Corralation between Canon Marketing and Ensign

Assuming the 90 days horizon Canon Marketing Japan is expected to generate 0.68 times more return on investment than Ensign. However, Canon Marketing Japan is 1.48 times less risky than Ensign. It trades about 0.13 of its potential returns per unit of risk. The Ensign Group is currently generating about -0.06 per unit of risk. If you would invest  2,700  in Canon Marketing Japan on October 27, 2024 and sell it today you would earn a total of  260.00  from holding Canon Marketing Japan or generate 9.63% return on investment over 90 days.

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

Canon Marketing Japan  vs.  The Ensign Group

Canon Marketing Japan

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canon Marketing Japan are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Canon Marketing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ensign Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Ensign Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Canon Marketing and Ensign

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

The idea behind Canon Marketing Japan and The Ensign 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.