Correlation Between Canoe EIT and Nano One

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

By analyzing existing cross correlation between Canoe EIT Income and Nano One Materials, you can compare the effects of market volatilities on Canoe EIT and Nano One 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 Canoe EIT with a short position of Nano One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoe EIT and Nano One.

Diversification Opportunities for Canoe EIT and Nano One

-0.4

Correlation Coefficient

Canoe EIT  Nano One

Very good diversification

The 3 months correlation between Canoe and Nano is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Canoe EIT Income and Nano One Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano One Materials and Canoe EIT 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 Canoe EIT Income are associated (or correlated) with Nano One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano One Materials has no effect on the direction of Canoe EIT i.e., Canoe EIT and Nano One go up and down completely randomly.

Pair Corralation between Canoe EIT and Nano One

Assuming the 90 days trading horizon Canoe EIT Income is expected to under-perform the Nano One. But the stock apears to be less risky and, when comparing its historical volatility, Canoe EIT Income is 10.29 times less risky than Nano One. The stock trades about -0.17 of its potential returns per unit of risk. The Nano One Materials is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  81.00  in Nano One Materials on September 28, 2024 and sell it today you would earn a total of  11.00  from holding Nano One Materials or generate 13.58% return on investment over 90 days.

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

Canoe EIT Income  vs.  Nano One Materials

Canoe EIT Income

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canoe EIT Income are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Canoe EIT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nano One Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nano One Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Canoe EIT and Nano One

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

The idea behind Canoe EIT Income and Nano One Materials 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.