Correlation Between Information Services and Canadian Utilities

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

By analyzing existing cross correlation between Information Services International Dentsu and Canadian Utilities Limited, you can compare the effects of market volatilities on Information Services 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 Information Services with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and Canadian Utilities.

Diversification Opportunities for Information Services and Canadian Utilities

0.44

Correlation Coefficient

Information Services  Canadian Utilities

Very weak diversification

The 3 months correlation between Information and Canadian is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Internati and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Information Services 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 Information Services International Dentsu 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 Information Services i.e., Information Services and Canadian Utilities go up and down completely randomly.

Pair Corralation between Information Services and Canadian Utilities

Assuming the 90 days horizon Information Services International Dentsu is expected to generate 1.76 times more return on investment than Canadian Utilities. However, Information Services is 1.76 times more volatile than Canadian Utilities Limited. It trades about 0.04 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.06 per unit of risk. If you would invest  3,900  in Information Services International Dentsu on March 24, 2025 and sell it today you would earn a total of  160.00  from holding Information Services International Dentsu or generate 4.1% return on investment over 90 days.

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

Information Services Internati  vs.  Canadian Utilities Limited

Information Services

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services International Dentsu are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Information Services is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Canadian Utilities

Risk-Adjusted Performance

Modest

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Information Services and Canadian Utilities

The main advantage of trading using opposite Information Services and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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 Information Services International Dentsu 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.