Correlation Between Canadian General and Mercantile Investment

Can any of the company-specific risk be diversified away by investing in both Canadian General and Mercantile Investment 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 Mercantile Investment 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 The Mercantile Investment, you can compare the effects of market volatilities on Canadian General and Mercantile Investment 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 Mercantile Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Mercantile Investment.

Diversification Opportunities for Canadian General and Mercantile Investment

0.84

Correlation Coefficient

Canadian General  Mercantile Investment

Very poor diversification

The 3 months correlation between Canadian and Mercantile is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and The Mercantile Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Mercantile Investment 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 Mercantile Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Mercantile Investment has no effect on the direction of Canadian General i.e., Canadian General and Mercantile Investment go up and down completely randomly.

Pair Corralation between Canadian General and Mercantile Investment

Assuming the 90 days trading horizon Canadian General Investments is expected to generate 1.4 times more return on investment than Mercantile Investment. However, Canadian General is 1.4 times more volatile than The Mercantile Investment. It trades about 0.3 of its potential returns per unit of risk. The Mercantile Investment is currently generating about 0.19 per unit of risk. If you would invest  177,749  in Canadian General Investments on April 24, 2025 and sell it today you would earn a total of  41,751  from holding Canadian General Investments or generate 23.49% return on investment over 90 days.

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

Canadian General Investments  vs.  The Mercantile Investment

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 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Canadian General exhibited solid returns over the last few months and may actually be approaching a breakup point.

The Mercantile Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Mercantile Investment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Mercantile Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Canadian General and Mercantile Investment

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

The idea behind Canadian General Investments and The Mercantile Investment 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.