Correlation Between AGF Management and IA Financial
Can any of the company-specific risk be diversified away by investing in both AGF Management and IA Financial 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 IA Financial 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 iA Financial, you can compare the effects of market volatilities on AGF Management and IA Financial 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 IA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and IA Financial.
Diversification Opportunities for AGF Management and IA Financial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AGF and IAG is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and iA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iA 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 IA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iA Financial has no effect on the direction of AGF Management i.e., AGF Management and IA Financial go up and down completely randomly.
Pair Corralation between AGF Management and IA Financial
Assuming the 90 days trading horizon AGF Management is expected to generate 2.45 times less return on investment than IA Financial. But when comparing it to its historical volatility, AGF Management Limited is 2.02 times less risky than IA Financial. It trades about 0.19 of its potential returns per unit of risk. iA Financial is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 11,269 in iA Financial on September 1, 2024 and sell it today you would earn a total of 2,114 from holding iA Financial or generate 18.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGF Management Limited vs. iA Financial
Performance |
| Timeline |
| AGF Management |
| iA Financial |
AGF Management and IA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGF Management and IA Financial
The main advantage of trading using opposite AGF Management and IA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management position performs unexpectedly, IA Financial 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 IA Financial will offset losses from the drop in IA Financial's long position.| AGF Management vs. IGM Financial | AGF Management vs. CI Financial Corp | AGF Management vs. iA Financial | AGF Management vs. Transcontinental |
| IA Financial vs. Great West Lifeco | IA Financial vs. Intact Financial | IA Financial vs. IGM Financial | IA Financial vs. Sun Life Financial |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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