Correlation Between Dynamic Global and PHN Canadian

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

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

Diversification Opportunities for Dynamic Global and PHN Canadian

-0.55

Correlation Coefficient

Dynamic Global  PHN Canadian

Excellent diversification

The 3 months correlation between Dynamic and PHN is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Global Fixed 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 Dynamic Global 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 Dynamic Global Fixed 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 Dynamic Global i.e., Dynamic Global and PHN Canadian go up and down completely randomly.

Pair Corralation between Dynamic Global and PHN Canadian

Assuming the 90 days trading horizon Dynamic Global is expected to generate 1.41 times less return on investment than PHN Canadian. But when comparing it to its historical volatility, Dynamic Global Fixed is 1.51 times less risky than PHN Canadian. It trades about 0.35 of its potential returns per unit of risk. PHN Canadian Equity is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  2,058  in PHN Canadian Equity on September 3, 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 Against
Strength	Very Weak
Accuracy	18.75%
Values	Daily Returns

Dynamic Global Fixed  vs.  PHN Canadian Equity

Dynamic Global Fixed

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Global Fixed are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak basic indicators, Dynamic Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PHN Canadian Equity

Risk-Adjusted Performance

25 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in PHN Canadian Equity are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unfluctuating basic indicators, PHN Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dynamic Global and PHN Canadian

The main advantage of trading using opposite Dynamic Global and PHN Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynamic Global 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 Dynamic Global Fixed 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.