Correlation Between Energy Income and Evolve Canadian

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

By analyzing existing cross correlation between Energy Income and Evolve Canadian Aggregate, you can compare the effects of market volatilities on Energy Income and Evolve Canadian 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 Energy Income with a short position of Evolve Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Income and Evolve Canadian.

Diversification Opportunities for Energy Income and Evolve Canadian

0.66

Correlation Coefficient

Energy Income  Evolve Canadian

Poor diversification

The 3 months correlation between Energy and Evolve is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Energy Income and Evolve Canadian Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Canadian Aggregate and Energy Income 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 Energy Income are associated (or correlated) with Evolve Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Canadian Aggregate has no effect on the direction of Energy Income i.e., Energy Income and Evolve Canadian go up and down completely randomly.

Pair Corralation between Energy Income and Evolve Canadian

Assuming the 90 days trading horizon Energy Income is expected to generate 6.85 times more return on investment than Evolve Canadian. However, Energy Income is 6.85 times more volatile than Evolve Canadian Aggregate. It trades about 0.07 of its potential returns per unit of risk. Evolve Canadian Aggregate is currently generating about 0.08 per unit of risk. If you would invest  149.00  in Energy Income on December 21, 2024 and sell it today you would earn a total of  14.00  from holding Energy Income or generate 9.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Energy Income  vs.  Evolve Canadian Aggregate

Energy Income

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Income are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Energy Income may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Evolve Canadian Aggregate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Canadian Aggregate are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy technical and fundamental indicators, Evolve Canadian is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Energy Income and Evolve Canadian

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

The idea behind Energy Income and Evolve Canadian Aggregate 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.