Correlation Between Desjardins American and Desjardins
Can any of the company-specific risk be diversified away by investing in both Desjardins American 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 American and Desjardins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desjardins American Equity and Desjardins RI USA, you can compare the effects of market volatilities on Desjardins American 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 American with a short position of Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins American and Desjardins.
Diversification Opportunities for Desjardins American and Desjardins
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Desjardins and Desjardins is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins American Equity and Desjardins RI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI USA and Desjardins American 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 American Equity 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 USA has no effect on the direction of Desjardins American i.e., Desjardins American and Desjardins go up and down completely randomly.
Pair Corralation between Desjardins American and Desjardins
Assuming the 90 days trading horizon Desjardins American is expected to generate 1.48 times less return on investment than Desjardins. In addition to that, Desjardins American is 1.08 times more volatile than Desjardins RI USA. It trades about 0.2 of its total potential returns per unit of risk. Desjardins RI USA is currently generating about 0.31 per unit of volatility. If you would invest 3,627 in Desjardins RI USA on August 30, 2024 and sell it today you would earn a total of 206.00 from holding Desjardins RI USA or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Desjardins American Equity vs. Desjardins RI USA
Performance |
| Timeline |
| Desjardins American |
| Desjardins RI USA |
Desjardins American and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desjardins American and Desjardins
The main advantage of trading using opposite Desjardins American and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins American 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 American vs. Desjardins RI Canada | Desjardins American vs. Desjardins RI Canada | Desjardins American vs. Desjardins Canadian Corporate | Desjardins American vs. Desjardins 1 5 Year |
| Desjardins vs. Desjardins American Equity | Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins Canadian Corporate |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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