Correlation Between AGF Management and Canadian Utilities

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Can any of the company-specific risk be diversified away by investing in both AGF Management and Canadian Utilities 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 AGF Management and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGF Management Limited and Canadian Utilities Limited, you can compare the effects of market volatilities on AGF Management and Canadian Utilities 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 AGF Management with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Canadian Utilities.

Diversification Opportunities for AGF Management and Canadian Utilities

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between AGF and Canadian is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and AGF Management 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 AGF Management Limited are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of AGF Management i.e., AGF Management and Canadian Utilities go up and down completely randomly.

Pair Corralation between AGF Management and Canadian Utilities

Assuming the 90 days horizon AGF Management Limited is expected to generate 2.97 times more return on investment than Canadian Utilities. However, AGF Management is 2.97 times more volatile than Canadian Utilities Limited. It trades about 0.27 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.07 per unit of risk. If you would invest  560.00  in AGF Management Limited on April 20, 2025 and sell it today you would earn a total of  220.00  from holding AGF Management Limited or generate 39.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

AGF Management Limited  vs.  Canadian Utilities Limited

 Performance 
       Timeline  
AGF Management 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AGF Management reported solid returns over the last few months and may actually be approaching a breakup point.
Canadian Utilities 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Utilities Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Canadian Utilities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AGF Management and Canadian Utilities Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AGF Management and Canadian Utilities

The main advantage of trading using opposite AGF Management and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.
The idea behind AGF Management Limited and Canadian Utilities Limited 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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