Correlation Between Desjardins Canadian and Desjardins
Can any of the company-specific risk be diversified away by investing in both Desjardins Canadian and Desjardins 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 Desjardins Canadian and Desjardins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desjardins Canadian Preferred and Desjardins RI Canada, you can compare the effects of market volatilities on Desjardins Canadian and Desjardins 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 Desjardins Canadian with a short position of Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins Canadian and Desjardins.
Diversification Opportunities for Desjardins Canadian and Desjardins
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Desjardins and Desjardins is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins Canadian Preferred and Desjardins RI Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Canada and Desjardins Canadian 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 Desjardins Canadian Preferred are associated (or correlated) with Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI Canada has no effect on the direction of Desjardins Canadian i.e., Desjardins Canadian and Desjardins go up and down completely randomly.
Pair Corralation between Desjardins Canadian and Desjardins
Assuming the 90 days trading horizon Desjardins Canadian is expected to generate 1.36 times less return on investment than Desjardins. But when comparing it to its historical volatility, Desjardins Canadian Preferred is 1.07 times less risky than Desjardins. It trades about 0.08 of its potential returns per unit of risk. Desjardins RI Canada is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,319 in Desjardins RI Canada on August 30, 2024 and sell it today you would earn a total of 958.00 from holding Desjardins RI Canada or generate 41.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Desjardins Canadian Preferred vs. Desjardins RI Canada
Performance |
| Timeline |
| Desjardins Canadian |
| Desjardins RI Canada |
Desjardins Canadian and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desjardins Canadian and Desjardins
The main advantage of trading using opposite Desjardins Canadian and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins Canadian position performs unexpectedly, Desjardins 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 Desjardins will offset losses from the drop in Desjardins' long position.| Desjardins Canadian vs. Desjardins Canadian Short | Desjardins Canadian vs. Desjardins Canadian Universe | Desjardins Canadian vs. Desjardins 1 5 Year | Desjardins Canadian vs. Desjardins 1 5 Year |
| Desjardins vs. iShares SPTSX 60 | Desjardins vs. iShares Core SPTSX | Desjardins vs. BMO SPTSX Capped | Desjardins vs. Vanguard FTSE Canada |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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