Correlation Between Desjardins and Mackenzie Large
Can any of the company-specific risk be diversified away by investing in both Desjardins and Mackenzie Large 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 Mackenzie Large 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 Mackenzie Large Cap, you can compare the effects of market volatilities on Desjardins and Mackenzie Large 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 Mackenzie Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins and Mackenzie Large.
Diversification Opportunities for Desjardins and Mackenzie Large
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Desjardins and Mackenzie is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins RI Canada and Mackenzie Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Large Cap 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 Mackenzie Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Large Cap has no effect on the direction of Desjardins i.e., Desjardins and Mackenzie Large go up and down completely randomly.
Pair Corralation between Desjardins and Mackenzie Large
Assuming the 90 days trading horizon Desjardins RI Canada is expected to generate 0.8 times more return on investment than Mackenzie Large. However, Desjardins RI Canada is 1.26 times less risky than Mackenzie Large. It trades about 0.35 of its potential returns per unit of risk. Mackenzie Large Cap is currently generating about 0.22 per unit of risk. If you would invest 3,181 in Desjardins RI Canada on September 12, 2024 and sell it today you would earn a total of 116.00 from holding Desjardins RI Canada or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Desjardins RI Canada vs. Mackenzie Large Cap
Performance |
| Timeline |
| Desjardins RI Canada |
| Mackenzie Large Cap |
Desjardins and Mackenzie Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desjardins and Mackenzie Large
The main advantage of trading using opposite Desjardins and Mackenzie Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins position performs unexpectedly, Mackenzie Large 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 Mackenzie Large will offset losses from the drop in Mackenzie Large's long position.| Desjardins vs. Desjardins RI USA | Desjardins vs. Desjardins RI Active | Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins RI Global |
| Mackenzie Large vs. Mackenzie Canadian Equity | Mackenzie Large vs. BMO MSCI EAFE | Mackenzie Large vs. Goldman Sachs ActiveBeta | Mackenzie Large vs. BMO Long Federal |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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