Correlation Between AKITA Drilling and Laurentian Bank
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Laurentian Bank 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 AKITA Drilling and Laurentian Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Laurentian Bank, you can compare the effects of market volatilities on AKITA Drilling and Laurentian Bank 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 AKITA Drilling with a short position of Laurentian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Laurentian Bank.
Diversification Opportunities for AKITA Drilling and Laurentian Bank
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AKITA and Laurentian is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Laurentian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank and AKITA Drilling 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 AKITA Drilling are associated (or correlated) with Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Laurentian Bank go up and down completely randomly.
Pair Corralation between AKITA Drilling and Laurentian Bank
Assuming the 90 days trading horizon AKITA Drilling is expected to generate 1.63 times more return on investment than Laurentian Bank. However, AKITA Drilling is 1.63 times more volatile than Laurentian Bank. It trades about 0.01 of its potential returns per unit of risk. Laurentian Bank is currently generating about 0.0 per unit of risk. If you would invest 175.00 in AKITA Drilling on September 3, 2024 and sell it today you would lose (14.00) from holding AKITA Drilling or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKITA Drilling vs. Laurentian Bank
Performance |
| Timeline |
| AKITA Drilling |
| Laurentian Bank |
AKITA Drilling and Laurentian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Laurentian Bank
The main advantage of trading using opposite AKITA Drilling and Laurentian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Laurentian Bank 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 Laurentian Bank will offset losses from the drop in Laurentian Bank's long position.The idea behind AKITA Drilling and Laurentian Bank 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.| Laurentian Bank vs. Colliers International Group | Laurentian Bank vs. Altus Group Limited | Laurentian Bank vs. Harvest Global REIT | Laurentian Bank vs. International Zeolite Corp |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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