Correlation Between ECN Capital and Timbercreek Financial
Can any of the company-specific risk be diversified away by investing in both ECN Capital and Timbercreek Financial 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 ECN Capital and Timbercreek Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECN Capital Corp and Timbercreek Financial Corp, you can compare the effects of market volatilities on ECN Capital and Timbercreek Financial 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 ECN Capital with a short position of Timbercreek Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECN Capital and Timbercreek Financial.
Diversification Opportunities for ECN Capital and Timbercreek Financial
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ECN and Timbercreek is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ECN Capital Corp and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial and ECN Capital 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 ECN Capital Corp are associated (or correlated) with Timbercreek Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timbercreek Financial has no effect on the direction of ECN Capital i.e., ECN Capital and Timbercreek Financial go up and down completely randomly.
Pair Corralation between ECN Capital and Timbercreek Financial
Assuming the 90 days trading horizon ECN Capital Corp is expected to generate 3.38 times more return on investment than Timbercreek Financial. However, ECN Capital is 3.38 times more volatile than Timbercreek Financial Corp. It trades about 0.16 of its potential returns per unit of risk. Timbercreek Financial Corp is currently generating about -0.08 per unit of risk. If you would invest 212.00 in ECN Capital Corp on September 3, 2024 and sell it today you would earn a total of 69.00 from holding ECN Capital Corp or generate 32.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECN Capital Corp vs. Timbercreek Financial Corp
Performance |
| Timeline |
| ECN Capital Corp |
| Timbercreek Financial |
ECN Capital and Timbercreek Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECN Capital and Timbercreek Financial
The main advantage of trading using opposite ECN Capital and Timbercreek Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECN Capital position performs unexpectedly, Timbercreek Financial 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 Timbercreek Financial will offset losses from the drop in Timbercreek Financial's long position.| ECN Capital vs. Element Fleet Management | ECN Capital vs. Colliers International Group | ECN Capital vs. Altus Group Limited | ECN Capital vs. FirstService Corp |
| Timbercreek Financial vs. Colliers International Group | Timbercreek Financial vs. Altus Group Limited | Timbercreek Financial vs. Harvest Global REIT | Timbercreek Financial vs. International Zeolite Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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