Correlation Between Definity Financial and AGF Management
Can any of the company-specific risk be diversified away by investing in both Definity Financial and AGF Management 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 Definity Financial and AGF Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definity Financial Corp and AGF Management Limited, you can compare the effects of market volatilities on Definity Financial and AGF Management 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 Definity Financial with a short position of AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definity Financial and AGF Management.
Diversification Opportunities for Definity Financial and AGF Management
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Definity and AGF is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Definity Financial 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 Definity Financial Corp are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Definity Financial i.e., Definity Financial and AGF Management go up and down completely randomly.
Pair Corralation between Definity Financial and AGF Management
Assuming the 90 days trading horizon Definity Financial is expected to generate 1.05 times less return on investment than AGF Management. But when comparing it to its historical volatility, Definity Financial Corp is 1.39 times less risky than AGF Management. It trades about 0.24 of its potential returns per unit of risk. AGF Management Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,053 in AGF Management Limited on August 28, 2024 and sell it today you would earn a total of 72.00 from holding AGF Management Limited or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definity Financial Corp vs. AGF Management Limited
Performance |
| Timeline |
| Definity Financial Corp |
| AGF Management |
Definity Financial and AGF Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definity Financial and AGF Management
The main advantage of trading using opposite Definity Financial and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definity Financial position performs unexpectedly, AGF Management 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 AGF Management will offset losses from the drop in AGF Management's long position.| Definity Financial vs. Trisura Group | Definity Financial vs. Pet Valu Holdings | Definity Financial vs. Intact Financial | Definity Financial vs. Topaz Energy Corp |
| AGF Management vs. NVIDIA CDR | AGF Management vs. Apple Inc CDR | AGF Management vs. Microsoft Corp CDR | AGF Management vs. Amazon CDR |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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