Correlation Between Canoe EIT and Yerbae Brands

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

Diversification Opportunities for Canoe EIT and Yerbae Brands

-0.55

Correlation Coefficient

Canoe EIT  Yerbae Brands

Excellent diversification

The 3 months correlation between Canoe and Yerbae is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Canoe EIT Income and Yerbae Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yerbae Brands Corp 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 Yerbae Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yerbae Brands Corp has no effect on the direction of Canoe EIT i.e., Canoe EIT and Yerbae Brands go up and down completely randomly.

Pair Corralation between Canoe EIT and Yerbae Brands

Assuming the 90 days trading horizon Canoe EIT Income is expected to under-perform the Yerbae Brands. But the stock apears to be less risky and, when comparing its historical volatility, Canoe EIT Income is 28.57 times less risky than Yerbae Brands. The stock trades about -0.3 of its potential returns per unit of risk. The Yerbae Brands Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Yerbae Brands Corp on September 22, 2024 and sell it today you would lose (2.00) from holding Yerbae Brands Corp or give up 14.29% of portfolio value over 90 days.

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

Canoe EIT Income  vs.  Yerbae Brands Corp

Canoe EIT Income

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canoe EIT Income are ranked lower than 13 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Yerbae Brands Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yerbae Brands Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yerbae Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Canoe EIT and Yerbae Brands

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

The idea behind Canoe EIT Income and Yerbae Brands Corp 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 Stocks Directory module to find actively traded stocks across global markets.