Correlation Between Canso Select and True North

Can any of the company-specific risk be diversified away by investing in both Canso Select and True North 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 True North 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 True North Gems, you can compare the effects of market volatilities on Canso Select and True North 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 True North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canso Select and True North.

Diversification Opportunities for Canso Select and True North

-0.19

Correlation Coefficient

Canso Select  True North

Good diversification

The 3 months correlation between Canso and True is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Canso Select Opportunities and True North Gems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True North Gems 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 True North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True North Gems has no effect on the direction of Canso Select i.e., Canso Select and True North go up and down completely randomly.

Pair Corralation between Canso Select and True North

Assuming the 90 days trading horizon Canso Select Opportunities is expected to generate 0.38 times more return on investment than True North. However, Canso Select Opportunities is 2.66 times less risky than True North. It trades about 0.03 of its potential returns per unit of risk. True North Gems is currently generating about 0.0 per unit of risk. If you would invest  221.00  in Canso Select Opportunities on September 14, 2024 and sell it today you would earn a total of  9.00  from holding Canso Select Opportunities or generate 4.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Canso Select Opportunities  vs.  True North Gems

Canso Select Opportu

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Select Opportunities are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Canso Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

True North Gems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days True North Gems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, True North is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Canso Select and True North

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

The idea behind Canso Select Opportunities and True North Gems 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.