Correlation Between Financial and Desjardins
Can any of the company-specific risk be diversified away by investing in both Financial and Desjardins 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 Desjardins 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 Desjardins RI Developed, you can compare the effects of market volatilities on Financial and Desjardins 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 Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Desjardins.
Diversification Opportunities for Financial and Desjardins
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Financial and Desjardins is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Desjardins RI Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Developed 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 Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI Developed has no effect on the direction of Financial i.e., Financial and Desjardins go up and down completely randomly.
Pair Corralation between Financial and Desjardins
Assuming the 90 days trading horizon Financial 15 Split is expected to generate 2.28 times more return on investment than Desjardins. However, Financial is 2.28 times more volatile than Desjardins RI Developed. It trades about 0.36 of its potential returns per unit of risk. Desjardins RI Developed is currently generating about 0.35 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial 15 Split vs. Desjardins RI Developed
Performance |
| Timeline |
| Financial 15 Split |
| Desjardins RI Developed |
Financial and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and Desjardins
The main advantage of trading using opposite Financial and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial position performs unexpectedly, Desjardins 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 Desjardins will offset losses from the drop in Desjardins' long position.| Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. North American Financial | Financial vs. Life Banc Split |
| Desjardins vs. Desjardins RI USA | Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins RI Developed | Desjardins vs. Desjardins RI Global |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |