Correlation Between Canso Credit and MedMira

Can any of the company-specific risk be diversified away by investing in both Canso Credit and MedMira 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 MedMira 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 MedMira, you can compare the effects of market volatilities on Canso Credit and MedMira 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 MedMira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canso Credit and MedMira.

Diversification Opportunities for Canso Credit and MedMira

0.72

Correlation Coefficient

Canso Credit  MedMira

Poor diversification

The 3 months correlation between Canso and MedMira is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Canso Credit Trust and MedMira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedMira 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 MedMira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedMira has no effect on the direction of Canso Credit i.e., Canso Credit and MedMira go up and down completely randomly.

Pair Corralation between Canso Credit and MedMira

Assuming the 90 days trading horizon Canso Credit is expected to generate 82.38 times less return on investment than MedMira. But when comparing it to its historical volatility, Canso Credit Trust is 14.09 times less risky than MedMira. It trades about 0.07 of its potential returns per unit of risk. MedMira is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  9.00  in MedMira on October 25, 2024 and sell it today you would earn a total of  5.00  from holding MedMira or generate 55.56% return on investment over 90 days.

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

Canso Credit Trust  vs.  MedMira

Canso Credit Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Credit Trust are ranked lower than 12 (%) 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.

MedMira

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MedMira are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, MedMira showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canso Credit and MedMira

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

The idea behind Canso Credit Trust and MedMira 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.