Correlation Between Income Financial and Canadian High

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

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

Diversification Opportunities for Income Financial and Canadian High

0.0

Correlation Coefficient

Income Financial  Canadian High

Pay attention - limited upside

The 3 months correlation between Income and Canadian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Income Financial Trust and Canadian High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian High Income and Income Financial 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 Income Financial Trust are associated (or correlated) with Canadian High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian High Income has no effect on the direction of Income Financial i.e., Income Financial and Canadian High go up and down completely randomly.

Pair Corralation between Income Financial and Canadian High

Assuming the 90 days trading horizon Income Financial Trust is expected to under-perform the Canadian High. In addition to that, Income Financial is 1.8 times more volatile than Canadian High Income. It trades about 0.0 of its total potential returns per unit of risk. Canadian High Income is currently generating about 0.02 per unit of volatility. If you would invest  664.00  in Canadian High Income on December 2, 2024 and sell it today you would earn a total of  36.00  from holding Canadian High Income or generate 5.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.76%
Values	Daily Returns

Income Financial Trust  vs.  Canadian High Income

Income Financial Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Income Financial Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Income Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Canadian High Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canadian High Income has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Canadian High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Income Financial and Canadian High

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

The idea behind Income Financial Trust and Canadian High Income 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.