Correlation Between Desjardins and Desjardins
Can any of the company-specific risk be diversified away by investing in both Desjardins 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 and Desjardins 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 RI Developed, you can compare the effects of market volatilities on Desjardins 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 with a short position of Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins and Desjardins.
Diversification Opportunities for Desjardins and Desjardins
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Desjardins and Desjardins is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins RI USA and Desjardins RI Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Developed 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. 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 Developed has no effect on the direction of Desjardins i.e., Desjardins and Desjardins go up and down completely randomly.
Pair Corralation between Desjardins and Desjardins
Assuming the 90 days trading horizon Desjardins RI USA is expected to generate 1.1 times more return on investment than Desjardins. However, Desjardins is 1.1 times more volatile than Desjardins RI Developed. It trades about 0.11 of its potential returns per unit of risk. Desjardins RI Developed is currently generating about 0.08 per unit of risk. If you would invest 2,609 in Desjardins RI USA on August 30, 2024 and sell it today you would earn a total of 1,224 from holding Desjardins RI USA or generate 46.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Desjardins RI USA vs. Desjardins RI Developed
Performance |
| Timeline |
| Desjardins RI USA |
| Desjardins RI Developed |
Desjardins and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desjardins and Desjardins
The main advantage of trading using opposite Desjardins and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins 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 vs. iShares SPTSX 60 | Desjardins vs. iShares Core SP | Desjardins vs. iShares Core SPTSX | Desjardins vs. BMO Aggregate Bond |
| Desjardins vs. BMO SP 500 | Desjardins vs. BMO MSCI Emerging | Desjardins vs. BMO Global Infrastructure | Desjardins vs. BMO MSCI EAFE |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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