Correlation Between Desjardins and Desjardins American
Can any of the company-specific risk be diversified away by investing in both Desjardins and Desjardins American 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 and Desjardins American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desjardins RI Canada and Desjardins American Equity, you can compare the effects of market volatilities on Desjardins and Desjardins American 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 with a short position of Desjardins American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins and Desjardins American.
Diversification Opportunities for Desjardins and Desjardins American
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Desjardins and Desjardins is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins RI Canada and Desjardins American Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins American and Desjardins 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 RI Canada are associated (or correlated) with Desjardins American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins American has no effect on the direction of Desjardins i.e., Desjardins and Desjardins American go up and down completely randomly.
Pair Corralation between Desjardins and Desjardins American
Assuming the 90 days trading horizon Desjardins is expected to generate 1.53 times less return on investment than Desjardins American. But when comparing it to its historical volatility, Desjardins RI Canada is 1.08 times less risky than Desjardins American. It trades about 0.13 of its potential returns per unit of risk. Desjardins American Equity is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,972 in Desjardins American Equity on September 2, 2024 and sell it today you would earn a total of 484.00 from holding Desjardins American Equity or generate 24.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 42.47% |
| Values | Daily Returns |
Desjardins RI Canada vs. Desjardins American Equity
Performance |
| Timeline |
| Desjardins RI Canada |
| Desjardins American |
Desjardins and Desjardins American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desjardins and Desjardins American
The main advantage of trading using opposite Desjardins and Desjardins American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins position performs unexpectedly, Desjardins American 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 American will offset losses from the drop in Desjardins American's long position.| Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins RI Developed | Desjardins vs. Desjardins RI USA | Desjardins vs. Desjardins RI USA |
| 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 |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |