Correlation Between Algoma Central and Accord Financial
Can any of the company-specific risk be diversified away by investing in both Algoma Central and Accord 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 Algoma Central and Accord Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algoma Central and Accord Financial Corp, you can compare the effects of market volatilities on Algoma Central and Accord 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 Algoma Central with a short position of Accord Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Central and Accord Financial.
Diversification Opportunities for Algoma Central and Accord Financial
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Algoma and Accord is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Central and Accord Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accord Financial Corp and Algoma Central 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 Algoma Central are associated (or correlated) with Accord Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accord Financial Corp has no effect on the direction of Algoma Central i.e., Algoma Central and Accord Financial go up and down completely randomly.
Pair Corralation between Algoma Central and Accord Financial
Assuming the 90 days trading horizon Algoma Central is expected to generate 0.38 times more return on investment than Accord Financial. However, Algoma Central is 2.65 times less risky than Accord Financial. It trades about 0.14 of its potential returns per unit of risk. Accord Financial Corp is currently generating about 0.04 per unit of risk. If you would invest 1,447 in Algoma Central on November 3, 2024 and sell it today you would earn a total of 45.00 from holding Algoma Central or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Central vs. Accord Financial Corp
Performance |
| Timeline |
| Algoma Central |
| Accord Financial Corp |
Algoma Central and Accord Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Central and Accord Financial
The main advantage of trading using opposite Algoma Central and Accord Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Central position performs unexpectedly, Accord 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 Accord Financial will offset losses from the drop in Accord Financial's long position.| Algoma Central vs. Goodfellow | Algoma Central vs. Leons Furniture Limited | Algoma Central vs. High Liner Foods | Algoma Central vs. Exco Technologies Limited |
| Accord Financial vs. Algoma Central | Accord Financial vs. Clairvest Group | Accord Financial vs. Clarke Inc | Accord Financial vs. ADF Group |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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