Correlation Between M Split and Canaf Investments

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

By analyzing existing cross correlation between M Split Corp and Canaf Investments, you can compare the effects of market volatilities on M Split and Canaf Investments 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 M Split with a short position of Canaf Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Split and Canaf Investments.

Diversification Opportunities for M Split and Canaf Investments

0.03

Correlation Coefficient

M Split  Canaf Investments

Significant diversification

The 3 months correlation between XMF-PB and Canaf is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding M Split Corp and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments and M Split 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 M Split Corp are associated (or correlated) with Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of M Split i.e., M Split and Canaf Investments go up and down completely randomly.

Pair Corralation between M Split and Canaf Investments

Assuming the 90 days trading horizon M Split Corp is expected to generate 0.14 times more return on investment than Canaf Investments. However, M Split Corp is 7.2 times less risky than Canaf Investments. It trades about 0.14 of its potential returns per unit of risk. Canaf Investments is currently generating about 0.02 per unit of risk. If you would invest  501.00  in M Split Corp on September 25, 2024 and sell it today you would earn a total of  24.00  from holding M Split Corp or generate 4.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

M Split Corp  vs.  Canaf Investments

M Split Corp

Risk-Adjusted Performance

11 of 100

Good

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

Canaf Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canaf Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Canaf Investments is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with M Split and Canaf Investments

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

The idea behind M Split Corp and Canaf Investments 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.