Correlation Between Canadian Utilities and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Eidesvik Offshore 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 Eidesvik Offshore 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 Eidesvik Offshore ASA, you can compare the effects of market volatilities on Canadian Utilities and Eidesvik Offshore 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 Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Eidesvik Offshore.
Diversification Opportunities for Canadian Utilities and Eidesvik Offshore
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Canadian and Eidesvik is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA 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 Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between Canadian Utilities and Eidesvik Offshore
Assuming the 90 days horizon Canadian Utilities Limited is expected to generate 0.39 times more return on investment than Eidesvik Offshore. However, Canadian Utilities Limited is 2.59 times less risky than Eidesvik Offshore. It trades about 0.06 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about -0.04 per unit of risk. If you would invest 2,274 in Canadian Utilities Limited on December 30, 2024 and sell it today you would earn a total of 70.00 from holding Canadian Utilities Limited or generate 3.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Canadian Utilities Limited vs. Eidesvik Offshore ASA
Performance |
Timeline |
Canadian Utilities |
Eidesvik Offshore ASA |
Canadian Utilities and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Canadian Utilities and Eidesvik Offshore
The main advantage of trading using opposite Canadian Utilities and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Eidesvik Offshore 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 Eidesvik Offshore will offset losses from the drop in Eidesvik Offshore's long position.Canadian Utilities vs. Tower Semiconductor | Canadian Utilities vs. Semiconductor Manufacturing International | Canadian Utilities vs. THAI BEVERAGE | Canadian Utilities vs. Thai Beverage Public |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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