Correlation Between Canadian General and Faction Investment

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

By analyzing existing cross correlation between Canadian General Investments and Faction Investment Group, you can compare the effects of market volatilities on Canadian General and Faction Investment 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 Canadian General with a short position of Faction Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Faction Investment.

Diversification Opportunities for Canadian General and Faction Investment

0.0

Correlation Coefficient

Canadian General  Faction Investment

Pay attention - limited upside

The 3 months correlation between Canadian and Faction is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Faction Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faction Investment and Canadian General 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 Canadian General Investments are associated (or correlated) with Faction Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faction Investment has no effect on the direction of Canadian General i.e., Canadian General and Faction Investment go up and down completely randomly.

Pair Corralation between Canadian General and Faction Investment

Assuming the 90 days trading horizon Canadian General Investments is expected to generate 0.22 times more return on investment than Faction Investment. However, Canadian General Investments is 4.5 times less risky than Faction Investment. It trades about 0.06 of its potential returns per unit of risk. Faction Investment Group is currently generating about -0.02 per unit of risk. If you would invest  3,097  in Canadian General Investments on September 18, 2024 and sell it today you would earn a total of  1,028  from holding Canadian General Investments or generate 33.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Canadian General Investments  vs.  Faction Investment Group

Canadian General Inv

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Canadian General is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Faction Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Faction Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Faction Investment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Canadian General and Faction Investment

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

The idea behind Canadian General Investments and Faction Investment Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.