Correlation Between Canso Credit and Emera Srs

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

By analyzing existing cross correlation between Canso Credit Trust and Emera Srs C, you can compare the effects of market volatilities on Canso Credit and Emera Srs 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 Canso Credit with a short position of Emera Srs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canso Credit and Emera Srs.

Diversification Opportunities for Canso Credit and Emera Srs

0.55

Correlation Coefficient

Canso Credit  Emera Srs

Very weak diversification

The 3 months correlation between Canso and Emera is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Canso Credit Trust and Emera Srs C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Srs C and Canso Credit 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 Canso Credit Trust are associated (or correlated) with Emera Srs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emera Srs C has no effect on the direction of Canso Credit i.e., Canso Credit and Emera Srs go up and down completely randomly.

Pair Corralation between Canso Credit and Emera Srs

Assuming the 90 days trading horizon Canso Credit Trust is expected to generate 0.5 times more return on investment than Emera Srs. However, Canso Credit Trust is 2.0 times less risky than Emera Srs. It trades about 0.21 of its potential returns per unit of risk. Emera Srs C is currently generating about 0.04 per unit of risk. If you would invest  1,530  in Canso Credit Trust on September 13, 2024 and sell it today you would earn a total of  48.00  from holding Canso Credit Trust or generate 3.14% return on investment over 90 days.

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

Canso Credit Trust  vs.  Emera Srs C

Canso Credit Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Credit Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canso Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Emera Srs C

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emera Srs C are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Emera Srs is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Canso Credit and Emera Srs

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

The idea behind Canso Credit Trust and Emera Srs C 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.