Correlation Between Canoe EIT and HR Real

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

Diversification Opportunities for Canoe EIT and HR Real

-0.83

Correlation Coefficient

Canoe EIT  HR Real

Pay attention - limited upside

The 3 months correlation between Canoe and HR-UN is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Canoe EIT Income and HR Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HR Real Estate 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 HR Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HR Real Estate has no effect on the direction of Canoe EIT i.e., Canoe EIT and HR Real go up and down completely randomly.

Pair Corralation between Canoe EIT and HR Real

Assuming the 90 days trading horizon Canoe EIT Income is expected to generate 0.47 times more return on investment than HR Real. However, Canoe EIT Income is 2.14 times less risky than HR Real. It trades about 0.19 of its potential returns per unit of risk. HR Real Estate is currently generating about -0.26 per unit of risk. If you would invest  1,425  in Canoe EIT Income on October 1, 2024 and sell it today you would earn a total of  96.00  from holding Canoe EIT Income or generate 6.74% return on investment over 90 days.

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

Canoe EIT Income  vs.  HR Real Estate

Canoe EIT Income

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canoe EIT Income are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Canoe EIT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

HR Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HR Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Canoe EIT and HR Real

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

The idea behind Canoe EIT Income and HR Real Estate 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.