Correlation Between North American and Illumin Holdings
Can any of the company-specific risk be diversified away by investing in both North American and Illumin Holdings 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 Illumin Holdings 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 illumin Holdings, you can compare the effects of market volatilities on North American and Illumin Holdings 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 Illumin Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Illumin Holdings.
Diversification Opportunities for North American and Illumin Holdings
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between North and Illumin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and illumin Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on illumin Holdings 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 Illumin Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of illumin Holdings has no effect on the direction of North American i.e., North American and Illumin Holdings go up and down completely randomly.
Pair Corralation between North American and Illumin Holdings
Assuming the 90 days trading horizon North American Financial is expected to generate 0.82 times more return on investment than Illumin Holdings. However, North American Financial is 1.22 times less risky than Illumin Holdings. It trades about 0.06 of its potential returns per unit of risk. illumin Holdings is currently generating about 0.0 per unit of risk. If you would invest 406.00 in North American Financial on September 2, 2024 and sell it today you would earn a total of 346.00 from holding North American Financial or generate 85.22% 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. illumin Holdings
Performance |
| Timeline |
| North American Financial |
| illumin Holdings |
North American and Illumin Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Illumin Holdings
The main advantage of trading using opposite North American and Illumin Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Illumin Holdings 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 Illumin Holdings will offset losses from the drop in Illumin Holdings' long position.| North American vs. Dividend Growth Split | North American vs. Dividend 15 Split | North American vs. Financial 15 Split | North American vs. Dividend 15 Split |
| Illumin Holdings vs. Laurentian Bank | Illumin Holdings vs. North American Financial | Illumin Holdings vs. Costco Wholesale Corp | Illumin Holdings vs. Canadian Imperial Bank |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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