Correlation Between Financial and Canadian General
Can any of the company-specific risk be diversified away by investing in both Financial and Canadian General 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 Canadian General 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 Canadian General Investments, you can compare the effects of market volatilities on Financial and Canadian General 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 Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Canadian General.
Diversification Opportunities for Financial and Canadian General
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Financial and Canadian is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv 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 Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Financial i.e., Financial and Canadian General go up and down completely randomly.
Pair Corralation between Financial and Canadian General
Assuming the 90 days trading horizon Financial 15 Split is expected to generate 1.19 times more return on investment than Canadian General. However, Financial is 1.19 times more volatile than Canadian General Investments. It trades about 0.36 of its potential returns per unit of risk. Canadian General Investments is currently generating about 0.03 per unit of risk. If you would invest 911.00 in Financial 15 Split on September 13, 2024 and sell it today you would earn a total of 76.00 from holding Financial 15 Split or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial 15 Split vs. Canadian General Investments
Performance |
| Timeline |
| Financial 15 Split |
| Canadian General Inv |
Financial and Canadian General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and Canadian General
The main advantage of trading using opposite Financial and Canadian General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial position performs unexpectedly, Canadian General 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 Canadian General will offset losses from the drop in Canadian General's long position.| Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. North American Financial | Financial vs. Life Banc Split |
| Canadian General vs. Berkshire Hathaway CDR | Canadian General vs. E L Financial Corp | Canadian General vs. E L Financial 3 | Canadian General vs. Molson Coors Canada |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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