Correlation Between Aclara Resources and Canso Credit

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

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

Diversification Opportunities for Aclara Resources and Canso Credit

-0.43

Correlation Coefficient

Aclara Resources  Canso Credit

Very good diversification

The 3 months correlation between Aclara and Canso is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Aclara Resources and Canso Credit Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canso Credit Trust and Aclara Resources 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 Aclara Resources are associated (or correlated) with Canso Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canso Credit Trust has no effect on the direction of Aclara Resources i.e., Aclara Resources and Canso Credit go up and down completely randomly.

Pair Corralation between Aclara Resources and Canso Credit

Assuming the 90 days trading horizon Aclara Resources is expected to generate 13.73 times more return on investment than Canso Credit. However, Aclara Resources is 13.73 times more volatile than Canso Credit Trust. It trades about 0.04 of its potential returns per unit of risk. Canso Credit Trust is currently generating about 0.18 per unit of risk. If you would invest  50.00  in Aclara Resources on September 25, 2024 and sell it today you would earn a total of  3.00  from holding Aclara Resources or generate 6.0% return on investment over 90 days.

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

Aclara Resources  vs.  Canso Credit Trust

Aclara Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aclara Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Aclara Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Canso Credit Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Credit Trust are ranked lower than 14 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aclara Resources and Canso Credit

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

The idea behind Aclara Resources and Canso Credit Trust 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.