Correlation Between CP ALL and Crown Seal

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

By analyzing existing cross correlation between CP ALL Public and Crown Seal Public, you can compare the effects of market volatilities on CP ALL and Crown Seal 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 CP ALL with a short position of Crown Seal. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and Crown Seal.

Diversification Opportunities for CP ALL and Crown Seal

0.04

Correlation Coefficient

CP ALL  Crown Seal

Significant diversification

The 3 months correlation between CPALL and Crown is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and Crown Seal Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Seal Public and CP ALL 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 CP ALL Public are associated (or correlated) with Crown Seal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Seal Public has no effect on the direction of CP ALL i.e., CP ALL and Crown Seal go up and down completely randomly.

Pair Corralation between CP ALL and Crown Seal

Assuming the 90 days trading horizon CP ALL Public is expected to under-perform the Crown Seal. In addition to that, CP ALL is 2.22 times more volatile than Crown Seal Public. It trades about -0.06 of its total potential returns per unit of risk. Crown Seal Public is currently generating about -0.09 per unit of volatility. If you would invest  4,600  in Crown Seal Public on December 29, 2024 and sell it today you would lose (300.00) from holding Crown Seal Public or give up 6.52% of portfolio value over 90 days.

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

CP ALL Public  vs.  Crown Seal Public

CP ALL Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days CP ALL Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Crown Seal Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crown Seal Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with CP ALL and Crown Seal

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

The idea behind CP ALL Public and Crown Seal Public 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.