Correlation Between Economic Investment and Altagas
Can any of the company-specific risk be diversified away by investing in both Economic Investment and Altagas 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 Economic Investment and Altagas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Economic Investment Trust and Altagas Ltd Pref, you can compare the effects of market volatilities on Economic Investment and Altagas 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 Economic Investment with a short position of Altagas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Economic Investment and Altagas.
Diversification Opportunities for Economic Investment and Altagas
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Economic and Altagas is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Economic Investment Trust and Altagas Ltd Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altagas Pref and Economic Investment 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 Economic Investment Trust are associated (or correlated) with Altagas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altagas Pref has no effect on the direction of Economic Investment i.e., Economic Investment and Altagas go up and down completely randomly.
Pair Corralation between Economic Investment and Altagas
Assuming the 90 days trading horizon Economic Investment Trust is expected to generate 1.03 times more return on investment than Altagas. However, Economic Investment is 1.03 times more volatile than Altagas Ltd Pref. It trades about 0.4 of its potential returns per unit of risk. Altagas Ltd Pref is currently generating about 0.14 per unit of risk. If you would invest 16,525 in Economic Investment Trust on August 29, 2024 and sell it today you would earn a total of 925.00 from holding Economic Investment Trust or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Economic Investment Trust vs. Altagas Ltd Pref
Performance |
| Timeline |
| Economic Investment Trust |
| Altagas Pref |
Economic Investment and Altagas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Economic Investment and Altagas
The main advantage of trading using opposite Economic Investment and Altagas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Economic Investment position performs unexpectedly, Altagas 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 Altagas will offset losses from the drop in Altagas' long position.| Economic Investment vs. Uniteds Limited | Economic Investment vs. E L Financial Corp | Economic Investment vs. Canadian General Investments | Economic Investment vs. Clairvest Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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