Correlation Between Primaris Retail and Canlan Ice

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

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

Diversification Opportunities for Primaris Retail and Canlan Ice

0.29

Correlation Coefficient

Primaris Retail  Canlan Ice

Modest diversification

The 3 months correlation between Primaris and Canlan is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Primaris Retail RE and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports and Primaris Retail 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 Primaris Retail RE are associated (or correlated) with Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of Primaris Retail i.e., Primaris Retail and Canlan Ice go up and down completely randomly.

Pair Corralation between Primaris Retail and Canlan Ice

Assuming the 90 days trading horizon Primaris Retail is expected to generate 8.05 times less return on investment than Canlan Ice. But when comparing it to its historical volatility, Primaris Retail RE is 1.96 times less risky than Canlan Ice. It trades about 0.01 of its potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  397.00  in Canlan Ice Sports on September 13, 2024 and sell it today you would earn a total of  12.00  from holding Canlan Ice Sports or generate 3.02% return on investment over 90 days.

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

Primaris Retail RE  vs.  Canlan Ice Sports

Primaris Retail RE

Risk-Adjusted Performance

0 of 100

Insignificant

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

Canlan Ice Sports

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Primaris Retail and Canlan Ice

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

The idea behind Primaris Retail RE and Canlan Ice Sports 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.