Correlation Between North American and Timbercreek Financial
Can any of the company-specific risk be diversified away by investing in both North American 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 North American and Timbercreek Financial 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 Timbercreek Financial Corp, you can compare the effects of market volatilities on North American 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 North American with a short position of Timbercreek Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Timbercreek Financial.
Diversification Opportunities for North American and Timbercreek Financial
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between North and Timbercreek is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial 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 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 North American i.e., North American and Timbercreek Financial go up and down completely randomly.
Pair Corralation between North American and Timbercreek Financial
Assuming the 90 days trading horizon North American Financial is expected to generate 1.86 times more return on investment than Timbercreek Financial. However, North American is 1.86 times more volatile than Timbercreek Financial Corp. It trades about 0.1 of its potential returns per unit of risk. Timbercreek Financial Corp is currently generating about 0.03 per unit of risk. If you would invest 352.00 in North American Financial on September 12, 2024 and sell it today you would earn a total of 375.00 from holding North American Financial or generate 106.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Financial vs. Timbercreek Financial Corp
Performance |
| Timeline |
| North American Financial |
| Timbercreek Financial |
North American and Timbercreek Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Timbercreek Financial
The main advantage of trading using opposite North American and Timbercreek Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American 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.| North American vs. Brompton Lifeco Split | North American vs. Prime Dividend Corp | North American vs. Financial 15 Split |
| Timbercreek Financial vs. Brompton Lifeco Split | Timbercreek Financial vs. North American Financial | Timbercreek Financial vs. Prime Dividend Corp | Timbercreek Financial vs. Financial 15 Split |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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