Correlation Between Canadian Utilities and TTW PCL

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

Diversification Opportunities for Canadian Utilities and TTW PCL

0.0

Correlation Coefficient

Canadian Utilities  TTW PCL

Pay attention - limited upside

The 3 months correlation between Canadian and TTW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and TTW PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTW PCL 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 TTW PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTW PCL has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and TTW PCL go up and down completely randomly.

Pair Corralation between Canadian Utilities and TTW PCL

If you would invest  2,275  in Canadian Utilities Limited on October 6, 2024 and sell it today you would earn a total of  72.00  from holding Canadian Utilities Limited or generate 3.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.56%
Values	Daily Returns

Canadian Utilities Limited  vs.  TTW PCL

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. Despite nearly stable basic indicators, Canadian Utilities is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

TTW PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TTW PCL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TTW PCL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Canadian Utilities and TTW PCL

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

The idea behind Canadian Utilities Limited and TTW PCL 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.