Correlation Between AGF Management and Transition Metals
Can any of the company-specific risk be diversified away by investing in both AGF Management and Transition Metals 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 Transition Metals 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 Transition Metals Corp, you can compare the effects of market volatilities on AGF Management and Transition Metals 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 Transition Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Transition Metals.
Diversification Opportunities for AGF Management and Transition Metals
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AGF and Transition is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Transition Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transition Metals Corp 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 Transition Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transition Metals Corp has no effect on the direction of AGF Management i.e., AGF Management and Transition Metals go up and down completely randomly.
Pair Corralation between AGF Management and Transition Metals
Assuming the 90 days trading horizon AGF Management is expected to generate 1.69 times less return on investment than Transition Metals. But when comparing it to its historical volatility, AGF Management Limited is 5.13 times less risky than Transition Metals. It trades about 0.11 of its potential returns per unit of risk. Transition Metals Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Transition Metals Corp on September 3, 2024 and sell it today you would lose (1.00) from holding Transition Metals Corp or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGF Management Limited vs. Transition Metals Corp
Performance |
| Timeline |
| AGF Management |
| Transition Metals Corp |
AGF Management and Transition Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGF Management and Transition Metals
The main advantage of trading using opposite AGF Management and Transition Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management position performs unexpectedly, Transition Metals 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 Transition Metals will offset losses from the drop in Transition Metals' 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 |
| Transition Metals vs. Arizona Gold Silver | Transition Metals vs. Quorum Information Technologies | Transition Metals vs. Capstone Mining Corp | Transition Metals vs. Labrador Iron Ore |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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