Correlation Between Corby Spirit and Canadian Utilities

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

By analyzing existing cross correlation between Corby Spirit and and Canadian Utilities Limited, you can compare the effects of market volatilities on Corby Spirit and Canadian Utilities 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 Corby Spirit with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corby Spirit and Canadian Utilities.

Diversification Opportunities for Corby Spirit and Canadian Utilities

0.67

Correlation Coefficient

Corby Spirit  Canadian Utilities

Poor diversification

The 3 months correlation between Corby and Canadian is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Corby Spirit and and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Corby Spirit 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 Corby Spirit and are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Corby Spirit i.e., Corby Spirit and Canadian Utilities go up and down completely randomly.

Pair Corralation between Corby Spirit and Canadian Utilities

Assuming the 90 days trading horizon Corby Spirit and is expected to generate 1.33 times more return on investment than Canadian Utilities. However, Corby Spirit is 1.33 times more volatile than Canadian Utilities Limited. It trades about 0.19 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.11 per unit of risk. If you would invest  1,220  in Corby Spirit and on December 22, 2024 and sell it today you would earn a total of  148.00  from holding Corby Spirit and or generate 12.13% return on investment over 90 days.

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

Corby Spirit and  vs.  Canadian Utilities Limited

Corby Spirit

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Corby Spirit and are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Corby Spirit may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Canadian Utilities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Utilities Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Canadian Utilities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Corby Spirit and Canadian Utilities

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

The idea behind Corby Spirit and and Canadian Utilities Limited 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.