Correlation Between Canadian Life and Dividend Select

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

By analyzing existing cross correlation between Canadian Life Companies and Dividend Select 15, you can compare the effects of market volatilities on Canadian Life and Dividend Select 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 Life with a short position of Dividend Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Life and Dividend Select.

Diversification Opportunities for Canadian Life and Dividend Select

0.86

Correlation Coefficient

Canadian Life  Dividend Select

Very poor diversification

The 3 months correlation between Canadian and Dividend is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Life Companies and Dividend Select 15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Select 15 and Canadian Life 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 Life Companies are associated (or correlated) with Dividend Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Select 15 has no effect on the direction of Canadian Life i.e., Canadian Life and Dividend Select go up and down completely randomly.

Pair Corralation between Canadian Life and Dividend Select

Assuming the 90 days trading horizon Canadian Life Companies is expected to generate 1.33 times more return on investment than Dividend Select. However, Canadian Life is 1.33 times more volatile than Dividend Select 15. It trades about 0.15 of its potential returns per unit of risk. Dividend Select 15 is currently generating about 0.16 per unit of risk. If you would invest  570.00  in Canadian Life Companies on April 24, 2025 and sell it today you would earn a total of  58.00  from holding Canadian Life Companies or generate 10.18% return on investment over 90 days.

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

Canadian Life Companies  vs.  Dividend Select 15

Canadian Life Companies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Life Companies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Canadian Life may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Dividend Select 15

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend Select 15 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dividend Select may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Canadian Life and Dividend Select

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

The idea behind Canadian Life Companies and Dividend Select 15 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.