Correlation Between Gatekeeper Systems and CAE

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

By analyzing existing cross correlation between Gatekeeper Systems and CAE Inc, you can compare the effects of market volatilities on Gatekeeper Systems and CAE 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 Gatekeeper Systems with a short position of CAE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatekeeper Systems and CAE.

Diversification Opportunities for Gatekeeper Systems and CAE

0.64

Correlation Coefficient

Gatekeeper Systems  CAE

Poor diversification

The 3 months correlation between Gatekeeper and CAE is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gatekeeper Systems and CAE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAE Inc and Gatekeeper Systems 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 Gatekeeper Systems are associated (or correlated) with CAE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAE Inc has no effect on the direction of Gatekeeper Systems i.e., Gatekeeper Systems and CAE go up and down completely randomly.

Pair Corralation between Gatekeeper Systems and CAE

Assuming the 90 days horizon Gatekeeper Systems is expected to generate 2.34 times less return on investment than CAE. In addition to that, Gatekeeper Systems is 1.34 times more volatile than CAE Inc. It trades about 0.08 of its total potential returns per unit of risk. CAE Inc is currently generating about 0.26 per unit of volatility. If you would invest  2,395  in CAE Inc on September 16, 2024 and sell it today you would earn a total of  923.00  from holding CAE Inc or generate 38.54% return on investment over 90 days.

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

Gatekeeper Systems  vs.  CAE Inc

Gatekeeper Systems

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gatekeeper Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Gatekeeper Systems showed solid returns over the last few months and may actually be approaching a breakup point.

CAE Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CAE Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, CAE displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gatekeeper Systems and CAE

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

The idea behind Gatekeeper Systems and CAE Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.