Correlation Between Canso Select and Highway 50

Can any of the company-specific risk be diversified away by investing in both Canso Select and Highway 50 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 Canso Select and Highway 50 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canso Select Opportunities and Highway 50 Gold, you can compare the effects of market volatilities on Canso Select and Highway 50 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 Canso Select with a short position of Highway 50. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canso Select and Highway 50.

Diversification Opportunities for Canso Select and Highway 50

0.22

Correlation Coefficient

Canso Select  Highway 50

Modest diversification

The 3 months correlation between Canso and Highway is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Canso Select Opportunities and Highway 50 Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway 50 Gold and Canso Select 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 Canso Select Opportunities are associated (or correlated) with Highway 50. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highway 50 Gold has no effect on the direction of Canso Select i.e., Canso Select and Highway 50 go up and down completely randomly.

Pair Corralation between Canso Select and Highway 50

Assuming the 90 days trading horizon Canso Select is expected to generate 26.66 times less return on investment than Highway 50. But when comparing it to its historical volatility, Canso Select Opportunities is 12.5 times less risky than Highway 50. It trades about 0.04 of its potential returns per unit of risk. Highway 50 Gold is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Highway 50 Gold on December 23, 2024 and sell it today you would earn a total of  12.00  from holding Highway 50 Gold or generate 46.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Canso Select Opportunities  vs.  Highway 50 Gold

Canso Select Opportu

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Select Opportunities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canso Select is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Highway 50 Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Highway 50 Gold are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Highway 50 showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canso Select and Highway 50

The main advantage of trading using opposite Canso Select and Highway 50 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canso Select position performs unexpectedly, Highway 50 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 Highway 50 will offset losses from the drop in Highway 50's long position.

The idea behind Canso Select Opportunities and Highway 50 Gold 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.