Correlation Between Independence Realty and Canlan Ice

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

By analyzing existing cross correlation between Independence Realty Trust and Canlan Ice Sports, you can compare the effects of market volatilities on Independence Realty and Canlan Ice 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 Independence Realty with a short position of Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independence Realty and Canlan Ice.

Diversification Opportunities for Independence Realty and Canlan Ice

-0.1

Correlation Coefficient

Independence Realty  Canlan Ice

Good diversification

The 3 months correlation between Independence and Canlan is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Independence Realty Trust and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports and Independence Realty 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 Independence Realty Trust are associated (or correlated) with Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of Independence Realty i.e., Independence Realty and Canlan Ice go up and down completely randomly.

Pair Corralation between Independence Realty and Canlan Ice

Considering the 90-day investment horizon Independence Realty Trust is expected to under-perform the Canlan Ice. In addition to that, Independence Realty is 5.96 times more volatile than Canlan Ice Sports. It trades about -0.23 of its total potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.23 per unit of volatility. If you would invest  294.00  in Canlan Ice Sports on October 8, 2024 and sell it today you would earn a total of  3.00  from holding Canlan Ice Sports or generate 1.02% return on investment over 90 days.

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

Independence Realty Trust  vs.  Canlan Ice Sports

Independence Realty Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Independence Realty Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Independence Realty is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Canlan Ice Sports

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Independence Realty and Canlan Ice

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

The idea behind Independence Realty Trust and Canlan Ice Sports 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.