Correlation Between Desjardins and IA Clarington
Can any of the company-specific risk be diversified away by investing in both Desjardins and IA Clarington 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 IA Clarington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desjardins RI Global and IA Clarington Strategic, you can compare the effects of market volatilities on Desjardins and IA Clarington 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 IA Clarington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins and IA Clarington.
Diversification Opportunities for Desjardins and IA Clarington
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Desjardins and ISIF is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins RI Global and IA Clarington Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Strategic 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 Global are associated (or correlated) with IA Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Strategic has no effect on the direction of Desjardins i.e., Desjardins and IA Clarington go up and down completely randomly.
Pair Corralation between Desjardins and IA Clarington
Assuming the 90 days trading horizon Desjardins RI Global is expected to generate 2.04 times more return on investment than IA Clarington. However, Desjardins is 2.04 times more volatile than IA Clarington Strategic. It trades about 0.26 of its potential returns per unit of risk. IA Clarington Strategic is currently generating about 0.11 per unit of risk. If you would invest 2,994 in Desjardins RI Global on August 25, 2024 and sell it today you would earn a total of 123.00 from holding Desjardins RI Global or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Desjardins RI Global vs. IA Clarington Strategic
Performance |
| Timeline |
| Desjardins RI Global |
| IA Clarington Strategic |
Desjardins and IA Clarington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desjardins and IA Clarington
The main advantage of trading using opposite Desjardins and IA Clarington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins position performs unexpectedly, IA Clarington 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 IA Clarington will offset losses from the drop in IA Clarington's long position.| Desjardins vs. Vanguard FTSE Canada | Desjardins vs. Vanguard Canadian Aggregate | Desjardins vs. Vanguard Total Market | Desjardins vs. Vanguard FTSE Emerging |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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