Correlation Between Canadian Utilities and Condor Energies

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

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

Diversification Opportunities for Canadian Utilities and Condor Energies

0.02

Correlation Coefficient

Canadian Utilities  Condor Energies

Significant diversification

The 3 months correlation between Canadian and Condor is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Condor Energies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Condor Energies and Canadian Utilities 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 Canadian Utilities Limited are associated (or correlated) with Condor Energies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Condor Energies has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Condor Energies go up and down completely randomly.

Pair Corralation between Canadian Utilities and Condor Energies

Assuming the 90 days horizon Canadian Utilities Limited is expected to under-perform the Condor Energies. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Utilities Limited is 3.57 times less risky than Condor Energies. The stock trades about -0.35 of its potential returns per unit of risk. The Condor Energies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  189.00  in Condor Energies on October 12, 2024 and sell it today you would earn a total of  6.00  from holding Condor Energies or generate 3.17% return on investment over 90 days.

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

Canadian Utilities Limited  vs.  Condor Energies

Canadian Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Utilities Limited has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Condor Energies

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Condor Energies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Condor Energies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian Utilities and Condor Energies

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

The idea behind Canadian Utilities Limited and Condor Energies 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.