Correlation Between Canlan Ice and CONSOLIDATED

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

By analyzing existing cross correlation between Canlan Ice Sports and CONSOLIDATED EDISON N, you can compare the effects of market volatilities on Canlan Ice and CONSOLIDATED 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 Canlan Ice with a short position of CONSOLIDATED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and CONSOLIDATED.

Diversification Opportunities for Canlan Ice and CONSOLIDATED

0.38

Correlation Coefficient

Canlan Ice  CONSOLIDATED

Weak diversification

The 3 months correlation between Canlan and CONSOLIDATED is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and CONSOLIDATED EDISON N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON and Canlan Ice 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 Canlan Ice Sports are associated (or correlated) with CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON has no effect on the direction of Canlan Ice i.e., Canlan Ice and CONSOLIDATED go up and down completely randomly.

Pair Corralation between Canlan Ice and CONSOLIDATED

Assuming the 90 days horizon Canlan Ice is expected to generate 1.69 times less return on investment than CONSOLIDATED. But when comparing it to its historical volatility, Canlan Ice Sports is 10.44 times less risky than CONSOLIDATED. It trades about 0.17 of its potential returns per unit of risk. CONSOLIDATED EDISON N is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  8,047  in CONSOLIDATED EDISON N on September 17, 2024 and sell it today you would earn a total of  112.00  from holding CONSOLIDATED EDISON N or generate 1.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	65.63%
Values	Daily Returns

Canlan Ice Sports  vs.  CONSOLIDATED EDISON N

Canlan Ice Sports

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CONSOLIDATED EDISON

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CONSOLIDATED EDISON N are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CONSOLIDATED is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Canlan Ice and CONSOLIDATED

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

The idea behind Canlan Ice Sports and CONSOLIDATED EDISON N 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.