Correlation Between North American and Forstrong Global
Can any of the company-specific risk be diversified away by investing in both North American and Forstrong Global 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 North American and Forstrong Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Financial and Forstrong Global Income, you can compare the effects of market volatilities on North American and Forstrong Global 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 North American with a short position of Forstrong Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Forstrong Global.
Diversification Opportunities for North American and Forstrong Global
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between North and Forstrong is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and Forstrong Global Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forstrong Global Income and North American 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 North American Financial are associated (or correlated) with Forstrong Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forstrong Global Income has no effect on the direction of North American i.e., North American and Forstrong Global go up and down completely randomly.
Pair Corralation between North American and Forstrong Global
Assuming the 90 days trading horizon North American Financial is expected to generate 0.68 times more return on investment than Forstrong Global. However, North American Financial is 1.48 times less risky than Forstrong Global. It trades about 0.5 of its potential returns per unit of risk. Forstrong Global Income is currently generating about -0.08 per unit of risk. If you would invest 1,032 in North American Financial on August 28, 2024 and sell it today you would earn a total of 27.00 from holding North American Financial or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Financial vs. Forstrong Global Income
Performance |
| Timeline |
| North American Financial |
| Forstrong Global Income |
North American and Forstrong Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Forstrong Global
The main advantage of trading using opposite North American and Forstrong Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Forstrong Global 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 Forstrong Global will offset losses from the drop in Forstrong Global's long position.| North American vs. Forstrong Global Income | North American vs. BMO Aggregate Bond | North American vs. Terreno Resources Corp | North American vs. iShares Canadian HYBrid |
| Forstrong Global vs. iShares SPTSX 60 | Forstrong Global vs. iShares Core SP | Forstrong Global vs. iShares Core SPTSX | Forstrong Global vs. BMO Aggregate Bond |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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