Correlation Between AutoCanada and Kingsway Financial
Can any of the company-specific risk be diversified away by investing in both AutoCanada and Kingsway 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 AutoCanada and Kingsway Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoCanada and Kingsway Financial Services, you can compare the effects of market volatilities on AutoCanada and Kingsway 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 AutoCanada with a short position of Kingsway Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoCanada and Kingsway Financial.
Diversification Opportunities for AutoCanada and Kingsway Financial
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AutoCanada and Kingsway is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AutoCanada and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial and AutoCanada 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 AutoCanada are associated (or correlated) with Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of AutoCanada i.e., AutoCanada and Kingsway Financial go up and down completely randomly.
Pair Corralation between AutoCanada and Kingsway Financial
Assuming the 90 days horizon AutoCanada is expected to generate 0.9 times more return on investment than Kingsway Financial. However, AutoCanada is 1.11 times less risky than Kingsway Financial. It trades about 0.28 of its potential returns per unit of risk. Kingsway Financial Services is currently generating about -0.08 per unit of risk. If you would invest 1,186 in AutoCanada on August 30, 2024 and sell it today you would earn a total of 143.00 from holding AutoCanada or generate 12.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AutoCanada vs. Kingsway Financial Services
Performance |
| Timeline |
| AutoCanada |
| Kingsway Financial |
AutoCanada and Kingsway Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoCanada and Kingsway Financial
The main advantage of trading using opposite AutoCanada and Kingsway Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoCanada position performs unexpectedly, Kingsway 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 Kingsway Financial will offset losses from the drop in Kingsway Financial's long position.| AutoCanada vs. Alsea SAB de | AutoCanada vs. Marstons PLC | AutoCanada vs. Bagger Daves Burger | AutoCanada vs. Marstons PLC |
| Kingsway Financial vs. CarGurus | Kingsway Financial vs. KAR Auction Services | Kingsway Financial vs. Driven Brands Holdings | Kingsway Financial vs. Group 1 Automotive |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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