Correlation Between Apartment Investment and Canaf Investments

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

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

Diversification Opportunities for Apartment Investment and Canaf Investments

0.64

Correlation Coefficient

Apartment Investment  Canaf Investments

Poor diversification

The 3 months correlation between Apartment and Canaf is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Apartment Investment and and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments and Apartment Investment 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 Apartment Investment and are associated (or correlated) with Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of Apartment Investment i.e., Apartment Investment and Canaf Investments go up and down completely randomly.

Pair Corralation between Apartment Investment and Canaf Investments

Considering the 90-day investment horizon Apartment Investment and is expected to under-perform the Canaf Investments. In addition to that, Apartment Investment is 1.07 times more volatile than Canaf Investments. It trades about -0.03 of its total potential returns per unit of risk. Canaf Investments is currently generating about 0.01 per unit of volatility. If you would invest  22.00  in Canaf Investments on January 7, 2025 and sell it today you would earn a total of  0.00  from holding Canaf Investments or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Apartment Investment and  vs.  Canaf Investments

Apartment Investment and

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apartment Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Apartment Investment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Canaf Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canaf Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Canaf Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Apartment Investment and Canaf Investments

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

The idea behind Apartment Investment and and Canaf Investments 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.