Correlation Between Jamieson Wellness and Canadian Utilities

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

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

Diversification Opportunities for Jamieson Wellness and Canadian Utilities

0.04

Correlation Coefficient

Jamieson Wellness  Canadian Utilities

Significant diversification

The 3 months correlation between Jamieson and Canadian is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Jamieson Wellness and Canadian Utilities Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Jamieson Wellness 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 Jamieson Wellness are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Jamieson Wellness i.e., Jamieson Wellness and Canadian Utilities go up and down completely randomly.

Pair Corralation between Jamieson Wellness and Canadian Utilities

Assuming the 90 days trading horizon Jamieson Wellness is expected to under-perform the Canadian Utilities. In addition to that, Jamieson Wellness is 6.05 times more volatile than Canadian Utilities Ltd. It trades about -0.16 of its total potential returns per unit of risk. Canadian Utilities Ltd is currently generating about -0.01 per unit of volatility. If you would invest  2,488  in Canadian Utilities Ltd on December 24, 2024 and sell it today you would lose (6.00) from holding Canadian Utilities Ltd or give up 0.24% of portfolio value over 90 days.

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

Jamieson Wellness  vs.  Canadian Utilities Ltd

Jamieson Wellness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jamieson Wellness has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Canadian Utilities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canadian Utilities Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Canadian Utilities is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Jamieson Wellness and Canadian Utilities

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

The idea behind Jamieson Wellness and Canadian Utilities Ltd 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.