Correlation Between Genesee Wyoming and Canadian Pacific

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Can any of the company-specific risk be diversified away by investing in both Genesee Wyoming and Canadian Pacific 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 Genesee Wyoming and Canadian Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genesee Wyoming and Canadian Pacific Railway, you can compare the effects of market volatilities on Genesee Wyoming and Canadian Pacific 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 Genesee Wyoming with a short position of Canadian Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genesee Wyoming and Canadian Pacific.

Diversification Opportunities for Genesee Wyoming and Canadian Pacific

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Genesee Wyoming and Canadian Pacific

If you would invest  7,369  in Canadian Pacific Railway on December 30, 2023 and sell it today you would earn a total of  1,448  from holding Canadian Pacific Railway or generate 19.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Genesee Wyoming  vs.  Canadian Pacific Railway

 Performance 
       Timeline  
Genesee Wyoming 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Genesee Wyoming has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Genesee Wyoming is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
Canadian Pacific Railway 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Pacific Railway are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Canadian Pacific may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Genesee Wyoming and Canadian Pacific Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Genesee Wyoming and Canadian Pacific

The main advantage of trading using opposite Genesee Wyoming and Canadian Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genesee Wyoming position performs unexpectedly, Canadian Pacific 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 Canadian Pacific will offset losses from the drop in Canadian Pacific's long position.
The idea behind Genesee Wyoming and Canadian Pacific Railway 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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