Correlation Between Financial and IA Financial
Can any of the company-specific risk be diversified away by investing in both Financial and IA 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 Financial and IA Financial 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 iA Financial, you can compare the effects of market volatilities on Financial and IA 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 Financial with a short position of IA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and IA Financial.
Diversification Opportunities for Financial and IA Financial
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Financial and IAG is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and iA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iA Financial 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 IA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iA Financial has no effect on the direction of Financial i.e., Financial and IA Financial go up and down completely randomly.
Pair Corralation between Financial and IA Financial
Assuming the 90 days trading horizon Financial is expected to generate 6.63 times less return on investment than IA Financial. But when comparing it to its historical volatility, Financial 15 Split is 8.57 times less risky than IA Financial. It trades about 0.25 of its potential returns per unit of risk. iA Financial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 11,691 in iA Financial on August 24, 2024 and sell it today you would earn a total of 1,832 from holding iA Financial or generate 15.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Financial 15 Split vs. iA Financial
Performance |
| Timeline |
| Financial 15 Split |
| iA Financial |
Financial and IA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and IA Financial
The main advantage of trading using opposite Financial and IA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial position performs unexpectedly, IA 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 IA Financial will offset losses from the drop in IA Financial's long position.| Financial vs. GOLDMAN SACHS CDR | Financial vs. Galaxy Digital Holdings | Financial vs. Hut 8 Mining | Financial vs. Bitfarms |
| IA Financial vs. Walmart Inc CDR | IA Financial vs. Amazon CDR | IA Financial vs. UPS CDR | IA Financial vs. HOME DEPOT CDR |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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