Correlation Between Canoe EIT and Dividend

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

By analyzing existing cross correlation between Canoe EIT Income and Dividend 15 Split, you can compare the effects of market volatilities on Canoe EIT and Dividend 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 Canoe EIT with a short position of Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoe EIT and Dividend.

Diversification Opportunities for Canoe EIT and Dividend

0.92

Correlation Coefficient

Canoe EIT  Dividend

Almost no diversification

The 3 months correlation between Canoe and Dividend is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Canoe EIT Income and Dividend 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend 15 Split and Canoe EIT 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 Canoe EIT Income are associated (or correlated) with Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend 15 Split has no effect on the direction of Canoe EIT i.e., Canoe EIT and Dividend go up and down completely randomly.

Pair Corralation between Canoe EIT and Dividend

Assuming the 90 days trading horizon Canoe EIT Income is expected to generate 0.26 times more return on investment than Dividend. However, Canoe EIT Income is 3.88 times less risky than Dividend. It trades about 0.1 of its potential returns per unit of risk. Dividend 15 Split is currently generating about 0.02 per unit of risk. If you would invest  1,159  in Canoe EIT Income on October 4, 2024 and sell it today you would earn a total of  360.00  from holding Canoe EIT Income or generate 31.06% return on investment over 90 days.

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

Canoe EIT Income  vs.  Dividend 15 Split

Canoe EIT Income

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canoe EIT Income are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canoe EIT is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Dividend 15 Split

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend 15 Split are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dividend may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Canoe EIT and Dividend

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

The idea behind Canoe EIT Income and Dividend 15 Split 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.