Correlation Between Backstageplay and Canoe EIT

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

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

Diversification Opportunities for Backstageplay and Canoe EIT

0.32

Correlation Coefficient

Backstageplay  Canoe EIT

Weak diversification

The 3 months correlation between Backstageplay and Canoe is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Backstageplay and Canoe EIT Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoe EIT Income and Backstageplay 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 Backstageplay are associated (or correlated) with Canoe EIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canoe EIT Income has no effect on the direction of Backstageplay i.e., Backstageplay and Canoe EIT go up and down completely randomly.

Pair Corralation between Backstageplay and Canoe EIT

Given the investment horizon of 90 days Backstageplay is expected to under-perform the Canoe EIT. In addition to that, Backstageplay is 14.68 times more volatile than Canoe EIT Income. It trades about -0.23 of its total potential returns per unit of risk. Canoe EIT Income is currently generating about -0.08 per unit of volatility. If you would invest  2,496  in Canoe EIT Income on March 5, 2024 and sell it today you would lose (13.00) from holding Canoe EIT Income or give up 0.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Backstageplay  vs.  Canoe EIT Income

Backstageplay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Backstageplay has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in July 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Canoe EIT Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Backstageplay and Canoe EIT

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

The idea behind Backstageplay and Canoe EIT Income 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.