Correlation Between AGF Management and First National
Can any of the company-specific risk be diversified away by investing in both AGF Management and First National 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 First National 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 First National Financial, you can compare the effects of market volatilities on AGF Management and First National 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 First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and First National.
Diversification Opportunities for AGF Management and First National
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AGF and First is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Financial has no effect on the direction of AGF Management i.e., AGF Management and First National go up and down completely randomly.
Pair Corralation between AGF Management and First National
Assuming the 90 days trading horizon AGF Management Limited is expected to generate 1.94 times more return on investment than First National. However, AGF Management is 1.94 times more volatile than First National Financial. It trades about 0.14 of its potential returns per unit of risk. First National Financial is currently generating about 0.11 per unit of risk. If you would invest 1,068 in AGF Management Limited on September 3, 2024 and sell it today you would earn a total of 52.00 from holding AGF Management Limited or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGF Management Limited vs. First National Financial
Performance |
| Timeline |
| AGF Management |
| First National Financial |
AGF Management and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGF Management and First National
The main advantage of trading using opposite AGF Management and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.| AGF Management vs. Colliers International Group | AGF Management vs. Altus Group Limited | AGF Management vs. Harvest Global REIT | AGF Management vs. International Zeolite Corp |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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