Correlation Between Canlan Ice and Stagwell

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

By analyzing existing cross correlation between Canlan Ice Sports and Stagwell, you can compare the effects of market volatilities on Canlan Ice and Stagwell 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 Canlan Ice with a short position of Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Stagwell.

Diversification Opportunities for Canlan Ice and Stagwell

0.0

Correlation Coefficient

Canlan Ice  Stagwell

Pay attention - limited upside

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

Pair Corralation between Canlan Ice and Stagwell

Assuming the 90 days horizon Canlan Ice is expected to generate 6.79 times less return on investment than Stagwell. But when comparing it to its historical volatility, Canlan Ice Sports is 34.95 times less risky than Stagwell. It trades about 0.13 of its potential returns per unit of risk. Stagwell is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  620.00  in Stagwell on September 19, 2024 and sell it today you would earn a total of  74.00  from holding Stagwell or generate 11.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Canlan Ice Sports  vs.  Stagwell

Canlan Ice Sports

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Stagwell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Stagwell is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Canlan Ice and Stagwell

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

The idea behind Canlan Ice Sports and Stagwell 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.