Correlation Between Canadian Pacific and PAMT P

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

By analyzing existing cross correlation between Canadian Pacific Railway and PAMT P, you can compare the effects of market volatilities on Canadian Pacific and PAMT P 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 Pacific with a short position of PAMT P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Pacific and PAMT P.

Diversification Opportunities for Canadian Pacific and PAMT P

-0.28

Correlation Coefficient

Canadian Pacific  PAMT P

Very good diversification

The 3 months correlation between Canadian and PAMT is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Pacific Railway and PAMT P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAMT P and Canadian Pacific 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 Pacific Railway are associated (or correlated) with PAMT P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAMT P has no effect on the direction of Canadian Pacific i.e., Canadian Pacific and PAMT P go up and down completely randomly.

Pair Corralation between Canadian Pacific and PAMT P

Allowing for the 90-day total investment horizon Canadian Pacific Railway is expected to under-perform the PAMT P. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Pacific Railway is 2.88 times less risky than PAMT P. The stock trades about -0.11 of its potential returns per unit of risk. The PAMT P is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,346  in PAMT P on May 14, 2025 and sell it today you would lose (91.00) from holding PAMT P or give up 6.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Canadian Pacific Railway  vs.  PAMT P

Canadian Pacific Railway

Risk-Adjusted Performance

Weakest

Over the last 90 days Canadian Pacific Railway has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

PAMT P

Risk-Adjusted Performance

Weakest

Over the last 90 days PAMT P has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, PAMT P is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Canadian Pacific and PAMT P

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

The idea behind Canadian Pacific Railway and PAMT P 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 Global Correlations module to find global opportunities by holding instruments from different markets.