Correlation Between Tangerine Equity and PHN Canadian

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

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

Diversification Opportunities for Tangerine Equity and PHN Canadian

0.98

Correlation Coefficient

Tangerine Equity  PHN Canadian

Almost no diversification

The 3 months correlation between Tangerine and PHN is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Tangerine Equity Growth and PHN Canadian Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHN Canadian Equity and Tangerine Equity 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 Tangerine Equity Growth are associated (or correlated) with PHN Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHN Canadian Equity has no effect on the direction of Tangerine Equity i.e., Tangerine Equity and PHN Canadian go up and down completely randomly.

Pair Corralation between Tangerine Equity and PHN Canadian

Assuming the 90 days trading horizon Tangerine Equity is expected to generate 1.24 times less return on investment than PHN Canadian. In addition to that, Tangerine Equity is 1.17 times more volatile than PHN Canadian Equity. It trades about 0.23 of its total potential returns per unit of risk. PHN Canadian Equity is currently generating about 0.33 per unit of volatility. If you would invest  2,058  in PHN Canadian Equity on September 2, 2024 and sell it today you would earn a total of  218.00  from holding PHN Canadian Equity or generate 10.59% return on investment over 90 days.

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

Tangerine Equity Growth  vs.  PHN Canadian Equity

Tangerine Equity Growth

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tangerine Equity Growth are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Despite quite weak forward-looking signals, Tangerine Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PHN Canadian Equity

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in PHN Canadian Equity are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unsteady basic indicators, PHN Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tangerine Equity and PHN Canadian

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

The idea behind Tangerine Equity Growth and PHN Canadian Equity 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.