Correlation Between Canadian Life and Hut 8

Can any of the company-specific risk be diversified away by investing in both Canadian Life and Hut 8 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 Canadian Life and Hut 8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canadian Life Companies and Hut 8 Mining, you can compare the effects of market volatilities on Canadian Life and Hut 8 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 Canadian Life with a short position of Hut 8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Life and Hut 8.

Diversification Opportunities for Canadian Life and Hut 8

0.78

Correlation Coefficient

Canadian Life  Hut 8

Poor diversification

The 3 months correlation between Canadian and Hut is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Life Companies and Hut 8 Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hut 8 Mining and Canadian Life 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 Canadian Life Companies are associated (or correlated) with Hut 8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hut 8 Mining has no effect on the direction of Canadian Life i.e., Canadian Life and Hut 8 go up and down completely randomly.

Pair Corralation between Canadian Life and Hut 8

Assuming the 90 days trading horizon Canadian Life Companies is expected to generate 0.28 times more return on investment than Hut 8. However, Canadian Life Companies is 3.52 times less risky than Hut 8. It trades about 0.11 of its potential returns per unit of risk. Hut 8 Mining is currently generating about 0.03 per unit of risk. If you would invest  650.00  in Canadian Life Companies on October 9, 2024 and sell it today you would earn a total of  26.00  from holding Canadian Life Companies or generate 4.0% return on investment over 90 days.

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

Canadian Life Companies  vs.  Hut 8 Mining

Canadian Life Companies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Life Companies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Canadian Life displayed solid returns over the last few months and may actually be approaching a breakup point.

Hut 8 Mining

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hut 8 Mining are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Hut 8 displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian Life and Hut 8

The main advantage of trading using opposite Canadian Life and Hut 8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Life position performs unexpectedly, Hut 8 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 Hut 8 will offset losses from the drop in Hut 8's long position.

The idea behind Canadian Life Companies and Hut 8 Mining 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..