Correlation Between Financial and Altus Group
Can any of the company-specific risk be diversified away by investing in both Financial and Altus Group 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 Financial and Altus Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial 15 Split and Altus Group Limited, you can compare the effects of market volatilities on Financial and Altus Group 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 Financial with a short position of Altus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Altus Group.
Diversification Opportunities for Financial and Altus Group
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Financial and Altus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Altus Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altus Group Limited and Financial 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 Financial 15 Split are associated (or correlated) with Altus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altus Group Limited has no effect on the direction of Financial i.e., Financial and Altus Group go up and down completely randomly.
Pair Corralation between Financial and Altus Group
Assuming the 90 days trading horizon Financial is expected to generate 3.14 times less return on investment than Altus Group. But when comparing it to its historical volatility, Financial 15 Split is 6.69 times less risky than Altus Group. It trades about 0.25 of its potential returns per unit of risk. Altus Group Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,864 in Altus Group Limited on September 3, 2024 and sell it today you would earn a total of 2,088 from holding Altus Group Limited or generate 54.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial 15 Split vs. Altus Group Limited
Performance |
| Timeline |
| Financial 15 Split |
| Altus Group Limited |
Financial and Altus Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and Altus Group
The main advantage of trading using opposite Financial and Altus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial position performs unexpectedly, Altus Group 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 Altus Group will offset losses from the drop in Altus Group's long position.| Financial vs. North American Financial | Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. Dividend 15 Split |
| Altus Group vs. Colliers International Group | Altus Group vs. FirstService Corp | Altus Group vs. Winpak | Altus Group vs. Ritchie Bros Auctioneers |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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