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 USA 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
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Desjardins and Desjardins is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins RI USA 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 USA 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 RI USA is expected to generate 0.93 times more return on investment than Desjardins American. However, Desjardins RI USA is 1.08 times less risky than Desjardins American. It trades about 0.31 of its potential returns per unit of risk. Desjardins American Equity is currently generating about 0.2 per unit of risk. 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 | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Desjardins RI USA vs. Desjardins American Equity
Performance |
| Timeline |
| Desjardins RI USA |
| 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. iShares SPTSX 60 | Desjardins vs. iShares Core SP | Desjardins vs. iShares Core SPTSX | Desjardins vs. BMO Aggregate Bond |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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