Correlation Between Exchange Income and Premium Brands
Can any of the company-specific risk be diversified away by investing in both Exchange Income and Premium Brands 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 Exchange Income and Premium Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Income and Premium Brands Holdings, you can compare the effects of market volatilities on Exchange Income and Premium Brands 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 Exchange Income with a short position of Premium Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Income and Premium Brands.
Diversification Opportunities for Exchange Income and Premium Brands
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exchange and Premium is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Income and Premium Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Brands Holdings and Exchange Income 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 Exchange Income are associated (or correlated) with Premium Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Brands Holdings has no effect on the direction of Exchange Income i.e., Exchange Income and Premium Brands go up and down completely randomly.
Pair Corralation between Exchange Income and Premium Brands
Assuming the 90 days trading horizon Exchange Income is expected to generate 0.59 times more return on investment than Premium Brands. However, Exchange Income is 1.7 times less risky than Premium Brands. It trades about -0.04 of its potential returns per unit of risk. Premium Brands Holdings is currently generating about -0.17 per unit of risk. If you would invest 5,543 in Exchange Income on October 22, 2024 and sell it today you would lose (159.00) from holding Exchange Income or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exchange Income vs. Premium Brands Holdings
Performance |
| Timeline |
| Exchange Income |
| Premium Brands Holdings |
Exchange Income and Premium Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exchange Income and Premium Brands
The main advantage of trading using opposite Exchange Income and Premium Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Income position performs unexpectedly, Premium Brands 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 Premium Brands will offset losses from the drop in Premium Brands' long position.| Exchange Income vs. Capital Power | Exchange Income vs. Keyera Corp | Exchange Income vs. Parkland Fuel | Exchange Income vs. TFI International |
| Premium Brands vs. CCL Industries | Premium Brands vs. North West | Premium Brands vs. Maple Leaf Foods | Premium Brands vs. FirstService 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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