Correlation Between First National and AGF Management
Can any of the company-specific risk be diversified away by investing in both First National and AGF Management 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 First National and AGF Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First National Financial and AGF Management Limited, you can compare the effects of market volatilities on First National and AGF Management 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 First National with a short position of AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and AGF Management.
Diversification Opportunities for First National and AGF Management
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and AGF is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and First National 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 First National Financial are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of First National i.e., First National and AGF Management go up and down completely randomly.
Pair Corralation between First National and AGF Management
Assuming the 90 days trading horizon First National is expected to generate 3.54 times less return on investment than AGF Management. But when comparing it to its historical volatility, First National Financial is 1.99 times less risky than AGF Management. It trades about 0.11 of its potential returns per unit of risk. AGF Management Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,042 in AGF Management Limited on September 1, 2024 and sell it today you would earn a total of 78.00 from holding AGF Management Limited or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First National Financial vs. AGF Management Limited
Performance |
| Timeline |
| First National Financial |
| AGF Management |
First National and AGF Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and AGF Management
The main advantage of trading using opposite First National and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, AGF Management 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 AGF Management will offset losses from the drop in AGF Management's long position.| First National vs. Champion Gaming Group | First National vs. Endeavour Silver Corp | First National vs. Nicola Mining | First National vs. Perseus Mining |
| AGF Management vs. IGM Financial | AGF Management vs. CI Financial Corp | AGF Management vs. iA Financial | AGF Management vs. Transcontinental |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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