Correlation Between Canso Credit and Hawkeye Gold

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

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

Diversification Opportunities for Canso Credit and Hawkeye Gold

-0.33

Correlation Coefficient

Canso Credit  Hawkeye Gold

Very good diversification

The 3 months correlation between Canso and Hawkeye is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Canso Credit Trust and Hawkeye Gold and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkeye Gold and Canso Credit 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 Canso Credit Trust are associated (or correlated) with Hawkeye Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkeye Gold has no effect on the direction of Canso Credit i.e., Canso Credit and Hawkeye Gold go up and down completely randomly.

Pair Corralation between Canso Credit and Hawkeye Gold

Assuming the 90 days trading horizon Canso Credit is expected to generate 1.06 times less return on investment than Hawkeye Gold. But when comparing it to its historical volatility, Canso Credit Trust is 35.04 times less risky than Hawkeye Gold. It trades about 0.19 of its potential returns per unit of risk. Hawkeye Gold and is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Hawkeye Gold and on September 1, 2024 and sell it today you would lose (1.00) from holding Hawkeye Gold and or give up 16.67% of portfolio value over 90 days.

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

Canso Credit Trust  vs.  Hawkeye Gold and

Canso Credit Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Credit Trust are ranked lower than 9 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Hawkeye Gold

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Canso Credit and Hawkeye Gold

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

The idea behind Canso Credit Trust and Hawkeye Gold and 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.