Correlation Between Minto Apartment and Canadian Apartment

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

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

Diversification Opportunities for Minto Apartment and Canadian Apartment

0.7

Correlation Coefficient

Minto Apartment  Canadian Apartment

Poor diversification

The 3 months correlation between Minto and Canadian is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Minto Apartment Real and Canadian Apartment Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Apartment and Minto Apartment 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 Minto Apartment Real are associated (or correlated) with Canadian Apartment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Apartment has no effect on the direction of Minto Apartment i.e., Minto Apartment and Canadian Apartment go up and down completely randomly.

Pair Corralation between Minto Apartment and Canadian Apartment

Assuming the 90 days trading horizon Minto Apartment Real is expected to under-perform the Canadian Apartment. But the stock apears to be less risky and, when comparing its historical volatility, Minto Apartment Real is 1.12 times less risky than Canadian Apartment. The stock trades about -0.03 of its potential returns per unit of risk. The Canadian Apartment Properties is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,251  in Canadian Apartment Properties on December 24, 2024 and sell it today you would earn a total of  15.00  from holding Canadian Apartment Properties or generate 0.35% return on investment over 90 days.

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

Minto Apartment Real  vs.  Canadian Apartment Properties

Minto Apartment Real

Risk-Adjusted Performance

Very Weak

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

Canadian Apartment

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Minto Apartment and Canadian Apartment

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

The idea behind Minto Apartment Real and Canadian Apartment Properties 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.