Correlation Between Canadian General and Open Text

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

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

Diversification Opportunities for Canadian General and Open Text

0.76

Correlation Coefficient

Canadian General  Open Text

Poor diversification

The 3 months correlation between Canadian and Open is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Open Text Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Text Corp and Canadian General 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 General Investments are associated (or correlated) with Open Text. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Text Corp has no effect on the direction of Canadian General i.e., Canadian General and Open Text go up and down completely randomly.

Pair Corralation between Canadian General and Open Text

Assuming the 90 days trading horizon Canadian General Investments is expected to generate 0.61 times more return on investment than Open Text. However, Canadian General Investments is 1.63 times less risky than Open Text. It trades about 0.25 of its potential returns per unit of risk. Open Text Corp is currently generating about 0.13 per unit of risk. If you would invest  3,500  in Canadian General Investments on April 30, 2025 and sell it today you would earn a total of  570.00  from holding Canadian General Investments or generate 16.29% return on investment over 90 days.

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

Canadian General Investments  vs.  Open Text Corp

Canadian General Inv

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Canadian General displayed solid returns over the last few months and may actually be approaching a breakup point.

Open Text Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Open Text Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Open Text displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian General and Open Text

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

The idea behind Canadian General Investments and Open Text Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.