Correlation Between Forward Water and Laurentian Bank
Can any of the company-specific risk be diversified away by investing in both Forward Water and Laurentian Bank 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 Forward Water and Laurentian Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forward Water Technologies and Laurentian Bank, you can compare the effects of market volatilities on Forward Water and Laurentian Bank 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 Forward Water with a short position of Laurentian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forward Water and Laurentian Bank.
Diversification Opportunities for Forward Water and Laurentian Bank
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Forward and Laurentian is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Forward Water Technologies and Laurentian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank and Forward Water 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 Forward Water Technologies are associated (or correlated) with Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of Forward Water i.e., Forward Water and Laurentian Bank go up and down completely randomly.
Pair Corralation between Forward Water and Laurentian Bank
Assuming the 90 days trading horizon Forward Water Technologies is expected to generate 10.53 times more return on investment than Laurentian Bank. However, Forward Water is 10.53 times more volatile than Laurentian Bank. It trades about 0.14 of its potential returns per unit of risk. Laurentian Bank is currently generating about -0.06 per unit of risk. If you would invest 8.00 in Forward Water Technologies on November 3, 2024 and sell it today you would earn a total of 2.00 from holding Forward Water Technologies or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forward Water Technologies vs. Laurentian Bank
Performance |
| Timeline |
| Forward Water Techno |
| Laurentian Bank |
Forward Water and Laurentian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forward Water and Laurentian Bank
The main advantage of trading using opposite Forward Water and Laurentian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forward Water position performs unexpectedly, Laurentian Bank 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 Laurentian Bank will offset losses from the drop in Laurentian Bank's long position.| Forward Water vs. Mako Mining Corp | Forward Water vs. Rogers Communications | Forward Water vs. Metalero Mining Corp | Forward Water vs. Magna Mining |
| Laurentian Bank vs. Canadian Western Bank | Laurentian Bank vs. National Bank of | Laurentian Bank vs. Canadian Imperial Bank | Laurentian Bank vs. Great West Lifeco |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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