Correlation Between Financial and IA Clarington
Can any of the company-specific risk be diversified away by investing in both Financial and IA Clarington 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 Clarington 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 Clarington Strategic, you can compare the effects of market volatilities on Financial and IA Clarington 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 Clarington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and IA Clarington.
Diversification Opportunities for Financial and IA Clarington
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Financial and ISIF is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and IA Clarington Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Strategic 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 Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Strategic has no effect on the direction of Financial i.e., Financial and IA Clarington go up and down completely randomly.
Pair Corralation between Financial and IA Clarington
Assuming the 90 days trading horizon Financial 15 Split is expected to generate 4.54 times more return on investment than IA Clarington. However, Financial is 4.54 times more volatile than IA Clarington Strategic. It trades about 0.43 of its potential returns per unit of risk. IA Clarington Strategic is currently generating about 0.14 per unit of risk. If you would invest 884.00 in Financial 15 Split on August 29, 2024 and sell it today you would earn a total of 128.00 from holding Financial 15 Split or generate 14.48% 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. IA Clarington Strategic
Performance |
| Timeline |
| Financial 15 Split |
| IA Clarington Strategic |
Financial and IA Clarington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and IA Clarington
The main advantage of trading using opposite Financial and IA Clarington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial position performs unexpectedly, IA Clarington 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 Clarington will offset losses from the drop in IA Clarington's long position.| Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. North American Financial | Financial vs. Life Banc Split |
| IA Clarington vs. IA Clarington Floating | IA Clarington vs. IA Clarington Loomis | IA Clarington vs. IA Clarington Core | IA Clarington vs. Purpose Global Bond |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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