Correlation Between Canadian Overseas and ATT
Can any of the company-specific risk be diversified away by investing in both Canadian Overseas and ATT 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 Canadian Overseas and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Overseas Petroleum and ATT Inc, you can compare the effects of market volatilities on Canadian Overseas and ATT 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 Canadian Overseas with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Overseas and ATT.
Diversification Opportunities for Canadian Overseas and ATT
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Canadian and ATT is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Overseas Petroleum and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Canadian Overseas 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 Canadian Overseas Petroleum are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Canadian Overseas i.e., Canadian Overseas and ATT go up and down completely randomly.
Pair Corralation between Canadian Overseas and ATT
Assuming the 90 days horizon Canadian Overseas Petroleum is expected to generate 23.31 times more return on investment than ATT. However, Canadian Overseas is 23.31 times more volatile than ATT Inc. It trades about 0.09 of its potential returns per unit of risk. ATT Inc is currently generating about -0.12 per unit of risk. If you would invest 0.20 in Canadian Overseas Petroleum on January 20, 2024 and sell it today you would earn a total of 0.00 from holding Canadian Overseas Petroleum or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Canadian Overseas Petroleum vs. ATT Inc
Performance |
Timeline |
Canadian Overseas |
ATT Inc |
Canadian Overseas and ATT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Canadian Overseas and ATT
The main advantage of trading using opposite Canadian Overseas and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Overseas position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.Canadian Overseas vs. Compania de Minas | Canadian Overseas vs. McEwen Mining | Canadian Overseas vs. Endeavour Silver Corp | Canadian Overseas vs. Hecla Mining |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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